If you are one of the many people injured in an accident, you may be eligible for a lawsuit loan. However, it is essential to know that a lawsuit loan is not the same as a bank loan. There are many differences. It is also crucial to understand these differences to take advantage of all the benefits available to those with a lawsuit loan.
What Is a Lawsuit Loan?
A lawsuit loan is a cash advance provided to someone who has filed or plans to file a lawsuit. The person can use the money for any purpose, including legal fees, living expenses, and medical bills.
What Is a Bank Loan?
A bank loan is one of the most common sources of funding. It is also known as a “debt instrument.” The lender will deposit money into your account, and you must pay it back over time through interest charges, usually with monthly payments.
Main Differences Between a Lawsuit Loan and a Bank Loan
Understanding the difference between a lawsuit and a bank loan can be tricky sometimes, as the concepts overlap. High Rise Financial, LLC is dedicated to offering you all the information you need to make an informed decision. Here are the key differences between a lawsuit loan and a bank loan:
1. A Lawsuit Loan Is Not Subject to Credit Approval
You do not need good credit to qualify for a lawsuit loan, which is a great advantage since it makes this financial path available to more people. This is because the lender is simply lending you money based on the strength of your case. To ensure that you have a solid case consult with your lawyer, preferably in the early stages of your legal pursuit.
2. A Lawsuit Loan Does Not Require Collateral
This means you do not have to put up any assets as security against the loan. However, a bank loan almost always requires some asset to secure the loan.
3. A Lawsuit Loan Usually Has Much Shorter Terms Than a Bank Loan
This means that you will need to pay back the money sooner, but it also means that you will likely have lower monthly payments. Paying back the loan should not be an issue if your case finalizes in due time and you emerge victoriously. However, you should be aware that lawsuits can – and often do – drag on for a long time.
4. A Lawsuit Loan Typically Comes With no Interest Rates or Fees
This means that you will not have to pay back any more money than you borrowed; a great advantage compared to bank loans.
5. You May Use a Bank Loan for Various Purposes
A bank loan allows more flexibility for spending purposes, like buying a home or car. However, you can also enjoy a degree a liberty in spending your lawsuit loan, including covering utilities, groceries, and mortgage.
This is perhaps the area where the two concepts overlap the most. If you have further questions about this area, do not hesitate to ask an expert, before deciding on a specific type of loan.
6. Bank Loans Are Typically for Larger Sums of Money
Bank loans are typically for larger sums of money, up to $500,000 or more, and have longer terms than lawsuit loans. Lawsuit loans are smaller and have shorter terms. In addition, the interest rates on lawsuit loans are usually higher than those on bank loans.
7. Lawsuit Loans Can Be Approved in 24 Hours
Additionally, lawsuit loans can be approved in as little as 24 hours and closed in about 30 days. You can obtain a decision from a bank lender within 48-72 hours, but it may take months before your application is finally accepted or rejected by the financial institution.
In contrast, with a lawsuit cash advance, there are usually no credit checks required. Therefore, even those who cannot qualify for other forms of financing could get the money they need quickly.
The Bottom Line
As you can see, there are many important differences between a lawsuit loan and a bank loan. If you are thinking about applying for a lawsuit loan, make sure you understand these differences so that you can take advantage of all the benefits available to you.