- January 3, 2019
- Jeffrey A. Rubin
Four Facts about Lawsuit Cash Advance:
Lawsuit cash advance is a fast growing trend in the accident case arena. Fifteen years ago nobody even heard of a cash advance for a lawsuit. Now, there are over 40,000 funding applications per month. Lawsuit cash advance is the new trend to help attorneys and their clients.
Despite it’s footprint, one has to carefully navigate among the different lawsuit cash advance companies. With lawsuit cash advances multiplying choosing the right company can mean the difference in thousands if not tens of thousands of dollars.
#1 . Cash Advance Helps Plaintiffs:
Making the correct decision about your accident funding company might be the most important decision you make in your lawsuit. Many lawyers advise against their clients taking out lawsuit loans. This is true for many reasons. One reason is that whatever work the lawyer does to help obtain this funding, he does not get paid for it. Lawyers want to make money just like everyone else. If they can spend time making money why would they “waste” time helping their clients? A second reason why a lawyer would advise against a cash advance for his client is out of ignorance. This ignorance probably stems from a bad experience that the lawyer had in the past with a particular funding company.
#1A Do Your Research:
This is why the best move a client can make is to do the research on his or her own and then present the case to the lawyer for a lawsuit cash advance. The client must research several legal funding companies in order to get a taste of what the competition offers. There are tons of funders out there and the client or a good lawyer must search among the weeds. Once the correct funding company is found this can provide a life line to an accident victim struggling to make ends meet.
A typical recipient of an advance is a working, single parent head-of-household living paycheck to paycheck with no savings. Without any independent line of credit it is going to be very hard to pay several different bills. There are medical bills to pay, especially if there is no insurance. There is rent or mortgage bills to pay. Finally, there a day to day expenses for food, internet, phone, car, etc
A simple accident can leave a person seriously strapped for cash. The best lawsuit funding company can provide that cushion so desperately needed at this time of crisis.
People often confuse legal funding with loans. In a certain sense they are correct. That is because they are getting upfront money without immediately giving anything in return. However, that’s about as far as the comparison goes. In reality, lawsuit cash advances are very different from loans and sometimes even better. The main difference between a loan and a lawsuit cash advance is that you don’t pay back the advance if you lose. One always has to pay back a loan.
Before the advent of accident funding, people would try and obtain new money in several different ways. They could try and get a bank loan. One could also try and max out on ones credit cards. Or, one could try and obtain a loan from friends or family members. In all of these various ways, you are always obligated to pay back whatever money you borrowed plus interest. Especially if it is from a family member! This only created more money owed and sets one back even further.
#2A No Pay If You Lose:
Now comes the lawsuit cash advance which only requires a repayment if the case is lost. In other words, if you lose at trial or don’t settle, then you don’t pay back the lawsuit funding company. Nada. In a legal funding advance, repayment is only required if the client’s lawsuit is successful. If the suit is not successful — for any reason –that’s the end of the deal..
Let’s be honest though, legal funding companies are out to make a profit and each uses different means to make money out of a borrowers lawsuit. All of them charge interest but how they charge interest. How they charge interest is the key mystery. Many of them charge fees to administer, underwrite, close or handle the cash advance. Some funders even try to make money by overcharging the client for a Federal Express delivery or bank wire. Again, we cannot emphasize enough, choose your legal finance company carefully.
Bottom line? Legal funding is not a loan. Rather, it is non-recourse debt that need not be paid back unless the plaintiff is successful in their lawsuit. But buyer beware!
#3: Legal Funding Takes Over The Case:
Another hesitancy of lawyers is the concern that the lawsuit funding company will take over the direction of the case. Untrue, for sure.
If a lawsuit funding company advances a large amount of money they may feel entitled to run the case on their own. Most states forbid the outside handling of a lawsuit by non lawyers and even lawyers not chosen by the client. A smart funding company will decide on the funding and then step away from the day to day handling of the lawsuit. Even the discussion of whether to settle the case or proceed should be made by the client and retained attorney only.
In choosing a lawsuit funding company, while this is usually a non issue make sure there is no interference.
#4: Legal Funding Costs Too Much:
Before settling on a legal finance funder ask 3 questions: 1) Do you charge fees. 2) Do you compound your rate of interest. 3) Exactly what will I owe after 1, 2, & 3 years if I borrow “x”? If you do not get a straight answer to all of these question, walk or run away fast, especially #3. One of the ways a funder can make money is by charging you a fee to administer the deal. A lawsuit funding company might charge a opening fee, an underwriting fee, a closing fee and a processing fees. What’s worse is that they will add the fee amount to the amount you are responsible to pay interest on. So a $1,000 advance becomes a $1,200 advance when you tack on the $200 fee. However, you will only receive $1,000.
#4A: Fees and Surcharges:
You must also consider whether the lawsuit cash advance company is charging compound interest. What is compound interest vs. a fixed rate of interest? What that means is does the funder charge interest each month over the previous month and on and on. If the starting interest rate is 3%. Monthly compounded that comes to about 70% a year! Stay away from funders that deceptively advertise 3% or 4% without telling you it is monthly compounded. You want to know up front what the annual rate of interest will be after 1,2 and 3 years.
Finally, how are you going to receive your money once you agree on a funder? Most cash advance companies will offer Federal Express, Western Union or a bank wire to send you your money. Watch out, because while these companies typically charge about $30 to send all different amounts, a lot of funders will charge you $139 for that service. Why? to make more money off of you. Remember that $1,000 advance that you are paying interest on $1,200? well if you pay $139 for a bank wire, you account will receive $861 but at that moment you are responsible for $1,200. Tick tock!.
#5: Why Redwood Funding Group:
Redwood Funding Group was founded by former personal injury lawyers who know exactly the game being played by other funders. At Redwood Funding Group you will never see a fee in any form, anytime. You won’t see what looks like a fee but is called a surcharge or something else just to make a few more bucks. No fee, in any form, ever. You also won’t see compound interest. Not daily, monthly, or yearly. Just no compound interest whatsoever. Redwood Funding Group has one fixed rate for pre settlement funding. You pay 15% for each six month period that you have our money. You can relax and concern yourself only with your lawsuit.
For example, if you borrow $1,000, like in the case above and you have the money for 5 months that means you are in the first six month period. As stated, at 15% that’s $150 for each six months so you owe Redwood period. So for 10 months you would owe $1,300. For 2 years, $1,600. Remember the example above where you are being charged for $1,250 but only end up getting $675? With Redwood Funding Group you get $970 because we deduct only $30 for Federal Express and don’t charge you any fees, as stated. So for 1 1/2 years it’s $1,450 vs. $2,500. It’s a no brainer. For the best and hottest lawsuit cash advance in the country go with Redwood Funding Group.
For accident loans, apply with Redwood Funding Group today by filling out an Application online. It’s that simple.