Payday Loan Vs Lawsuit Loans
Do not confuse payday loans with lawsuit funding. The two types of lending are completely different. The very idea that payday loans are the same as lawsuit loans is completely wrong. The way the money is borrowed, qualification, the process, the rates and the way money is paid back are all different. Payday loans and lawsuit funding should never be associated together as the same type lending instrument.
What are payday loans?
Payday loans are simply short term loans which are borrowed against a person’s paycheck.
What are lawsuit loans?
A lawsuit loan is simply a non recourse advance against a pending or settled lawsuit.
What are the qualifications for a payday loan?
In order to qualify for a payday advance a person must have a full time job, have a minimum salary of $1,800 dollars per month after taxes, hold a direct deposit checking account, be 18 years or older and a U.S. citizen or permanent resident.
What are the qualifications for a lawsuit cash advance?
A person must be involved in a pending lawsuit or one that was recently settled and must be represented by an attorney.
What are the rates for a payday loan?
The rates vary depending upon the state. There are some companies that charge upwards of over 300% or more. Payday loans are very expensive and should always be considered as a last resort.
What are the rates for a personal injury advance?
The rates also vary depending upon the strength of the case. The average is between 2.5% – 3.25% compounded monthly. This is just one example of a payment schedule. There are other examples of flat rate lending which are lower in the short-term but higher in the long-run.
How are payday loans paid back?
A cash advance is paid back when the employer deposits funds into the checking account. If a person defaults on a payday loan they may be faced with a much larger problem. Some companies may offer extended payment plans while others may suggest a rollover. The amount of money you will owe back will significantly increase with each passing week. If you decide to default on the loan and close your banking account, it’s likely you will passed into collections, and possibly end up in court.
How are lawsuit loans paid back?
Lawsuit funding is non recourse. This means the lender will only receive payback if the client wins their case. If they lose their case, the lender receives nothing. When the client wins the case the attorney will take his portion agreed upon and then pay off the lien to the funding company. If an applicant borrows more than they receive in compensation, the attorney will first receive payment and the funding company will receive the remainder of the balance.
While both of these instruments should be a last resort, lawsuit loans are generally a lot safer in terms of payback and rates. If you are considering both options, we suggest taking a look at a lawsuit cash advance prior to going through the payday loan process.
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