If you’re looking for a pre-settlement loan, one of the first things you’ll want to know is how much interest you’ll be paying. After all, interest rates can make a big difference in the overall cost of your lawsuit loan. In this article, we’ll discuss how pre-settlement loan interest rates are determined and give you some tips on how to shop for low-interest loans.
How much will the interest rate be?
At Provident lawsuit loans, we offer some of the lowest cost pre-settlement funding in the industry. Our rates start at 15% simple, semi-annual.
At other funding companies, rates may vary. Most lawsuit loan companies charge around 3%, compounded monthly.
In general, the interest rate on a pre-settlement loan will be higher than the interest rate on a traditional asset-backed loan (like a mortgage or auto loan from a dealer). This is because the lender is taking on more risk. Unlike traditional loans, you are only required to repay settlement funding if your case is successful.
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What factors will affect the pre-settlement loan interest rate?
There are a few factors that may affect the amount of interest paid on your pre-settlement loan. One such factor is the risk involved in your case.
For example, if you have a strong case with a high probability of success, you may be offered a lower interest rate. On the other hand, if your case is more likely to settle for a lower amount or has a higher chance of losing, you may be offered a higher interest rate.
Other factors that may affect your interest rate include the amount of money you are borrowing, the length of time you need to repay the loan, and whether or not the funding company has had a successful history in providing funding to plaintiffs represented by your law office.
Interest rates matter – why it’s important to find low-interest pre-settlement loans
As we mentioned earlier, interest rates can make a big difference in the overall cost of your loan. For example, let’s say you’re borrowing $10,000 from a pre-settlement funding company.
Assuming in both cases that no fees are charged, if the company charges 15% simple, semi-annual interest, you would owe $3,000 in interest after one year. However, if the company charges 4%, compounded monthly, you would owe more than $6,000 in interest after one year – that’s two times as much!
This is why it’s important to shop around for pre-settlement loans with low interest rates. By doing so, you can save yourself a lot of money in the long run.
Tips for shopping for low rate settlement funding
Here are a few tips to help you shop for pre-settlement loans with low interest rates:
- Get multiple quotes: Don’t just go with the first company you find. Get quotes from a few different companies so you can compare rates.
- Ask about fees: In addition to interest, some companies may charge fees for things like origination, processing, or document preparation. These fees can add up, so be sure to ask about them upfront.
- Compare terms: If possible, compare multiple quotes side-by-side to see which is best for you. Most reputable companies can provide you with a quote with a payoff table that shows exactly how much you owe over time.
- Read the fine print: Be sure to read the fine print of any loan agreement before you sign anything. This way, you’ll know exactly what you’re agreeing to.
Always be sure to get quotes in writing. Try to avoid relying on quotes that involve large ranges (e.g. one to four percent, monthly). If you’re having trouble getting a quote upfront from a lawsuit loan company, it may be best to move on to another company.
Conclusion
When shopping for low interest pre-settlement loans, it’s important to compare interest rates, fees, and terms. By doing so, you can ensure that you’re getting the lowest cost pre-settlement funding possible.
At Provident, we offer some of the lowest cost pre-settlement funding in the industry. Our rates start at 15% simple, semi-annual, with no upfront fees charged. If you’re in need of pre-settlement funding, we encourage you to contact us today for a free, no-obligation quote.