Legal Loans and Regular Loans: What is the Difference?

Shay Morrigan | December 17th, 2012

Unlike credit card advances and personal loans, which require monthly repayments, legal loans are not really loans. Also called “legal funding,” they are more like cash advances on the money you expect to be paid when you receive your jury verdict or negotiate your settlement.┬áIf you are a plaintiff in a personal injury or workman’s compensation case, and you are feeling financial pressure, you may be tempted to turn to credit cards or go to your bank for a personal loan to cover litigation fees, court filings, or regular everyday expenses. Before you do that, however, you may want to speak to one of the reputable lawsuit loan companies, like LawStreet Capital, as they will likely have a better option for you.

What are legal loans?

A legal loan, which may also be called legal funding, legal financing, or settlement funding, is money provided to you in anticipation of a positive outcome on your case. Legal funding companies advance the money to you, and when you win your award or negotiate your settlement, they receive the money back at that point.

Legal funding may also be provided to you if you are receiving a structured settlement. That means you are receiving payments on a settlement that was negotiated from your case, and these payments are stretched out over a period of several years. If you get into a financial bind and need more of those funds right away, legal funding companies can advance you that money based on future earnings from the settlement fund.

What is the difference between a legal loan and a regular loan?

There are several differences between these two types of loans. First of all, there are no credit checks with a legal loan. Because you are not really “borrowing” money, your credit score is not at issue.

Secondly, there are no monthly payments to make. Instead, you pay the money back when the case is won or when a settlement is reached.

Perhaps the biggest difference between a regular loan and a legal loan is that there is no risk to you. If a bank lends you money, and you are unable to pay it back, you face the consequences. These may include increased interest rates, garnished wages, a lawsuit, bankruptcy, and a blemish on your credit score. With legal funding, however, there is no risk.

If you receive a legal loan and then lose your case, the legal funding company loses the money they advanced to you. You are not required to pay anything back. That means if you are facing mounting bills, medical expenses, litigation charges, and more, a legal loan is likely to be a better option for you than other types of loans that put you at risk.

Best rates for litigation loans

LawStreet Capital is one of the leading providers of legal loans for those involved in litigation who need immediate financial assistance. Rather than risk future financial difficulties, you can get the money you need today without risking your credit rating or future income.

We do not perform credit checks, and offer a free, no-hassle application and approval within 24 hours. If you are approved, we can get your cash to you overnight. Call toll-free 800-345-8500 for a free application today.