When you are in a financial pinch and need money to pay your bills while waiting for a settlement or personal injury lawsuit, the good news is that you do have options. You might be able to use a credit card, borrow from a friend or qualify for pre-settlement funding, also known as legal funding. Since some financing options are better than others that don’t require you to pay more than you borrowed, it’s important that you know the pros and cons of each before choosing.
Personal Loans
If you have a fairly high credit score or a history of good credit, a personal loan can be relatively easy to get. Usually, you don’t have to wait long for the money and you can use it however you’d like. Personal loans have a few major drawbacks, though. One is that their interest rates tend to be high, around nine to 11 percent. Another is that you’re taking on a big risk in getting the loan, as you do have to pay it back, with interest.
Credit Cards
Credit cards are similar to personal loans, in that they are relatively easy to obtain if you have decent credit, tend to have high interest rates and you need to pay them back, no matter the outcome of your lawsuit. You can use a credit card pretty much anywhere, from a grocery store to a supermarket and you’re likely to have one in your wallet already. One benefit of using a credit card for funding is that you usually don’t have to pay interest if you pay the full amount of your balance within a certain amount of time. Aside from the potentially high-interest rate, drawbacks of using a credit card include having to pay high fees if you pay late or go over your limit. Some cards also charge an annual fee.
Borrowing From Friends or Family
Borrowing money from friends or family can be an easy way to get the funds you need while waiting for a settlement. After all, if your friends or family members have the funds, they are likely to want to help you if they see you in need. But, borrowing from people you know might be the riskiest move of all. If you borrow from a bank or credit card company and have trouble paying it back, you hurt your credit score and the bank might not lend to you in the future. If you borrow from a loved one, your score remains intact, but you risk permanently damaging your relationship if you have trouble paying it back or if you aren’t on the same page about repayments.
Pre-settlement Funding
Pre-settlement funding can help you cover the costs of living expenses, medical bills and other needs as you wait for a settlement. If you are approved for funding, you can receive up to 15 percent of your anticipated settlement, within 24 hours of approval. Unlike the other three options, pre-settlement funding is not a loan, making it one of the safest options. If you don’t win your case, you don’t have to pay back the money you received. If you do win, the money is taken directly from your settlement. You also don’t have to worry about paying upfront fees or interest rates when you obtain pre-settlement funding.
If you’re waiting for a lawsuit to go to trial and are feeling pressured to settle in order to help pay your bills, consider all of your financing options closely. To learn more about pre-settlement funding and to see if it’s the right choice for you, contact us at Cherokee Funding today. We have the best reputation in the industry and aim to be good stewards to those in need.
