If you have ever been injured in an accident and you lost the capacity to continue with your regular income generating activity, life may sometimes become hard, that you are compelled to get financial resources from a myriad of places. The common options are usually to borrow from friends and family, check the credit unions or even try to get some lending facilities from the bank.
However, when these options are never available, one is compelled to try extreme measures such as going for payday loans or get legal funding in the form of lawsuit loans. These two have become a great source of reprieve for people pressed financially, yet they still have bills to take care of after exhausting all the available sources of funds.
Though both are loans, they come with totally different terms, and if you are considering either, it is imperative to know exactly what you will be walking into, including the pros and the cons so that you are well advised before making the final decision.
About Payday Loans
Payday loans are mostly suited for people who live from paycheck to paycheck, though they could also be used as the source of financial reprieve when you are injured and you are out of financial options. With payday loans, you apply for funding with the promise that you will repay the advanced amount at an agreed interest rate.
These loans are not cheap and they usually come with relatively high interest rates compared to the other types of loans. If you are diligent enough and pay the borrowed sum at the agreed time, you could pay less compared to when you default and pay the loan at another date than the agreed one. The longer you take to repay the loan, the higher the interest rates you will pay.
The payday loan industry is a highly regulated one by both the state and the federal government. So strict are the rules of the game in this industry that there are some states where you are not allowed to go for this type of lending. Yet in some states, the amount you can borrow as payday loan is limited to a certain figure, beyond which no lender would be willing to give you any money. In as much as it is such a strict industry, it has been of great reprieve to people who find themselves without money before the next payday.
Financial experts, however, are not for this kind of behavior, because it signifies that one is simply living beyond their means if they are unable to live on what they are earning until the next payday. It also points to a poor saving culture because those who go for these kinds of facilities simply don’t have a strict saving culture for the rainy days, thus when they are confronted with any financial emergency, then the first place they head to is payday loans.
About Lawsuit Loans
Lawsuit loans are also another form of lending, but they operate in a completely different manner than payday loans. These are not loans you will go for when you need to plug a deficit in your budget or when you need to take care of a financial emergency before you the next payday. In fact, the term, “lawsuit” may be misleading since these are not actual loans, but rather investments in your legal case.
In most cases, legal funding options are availed to those who have pending lawsuits in court and are hopeful of a positive outcome in the settlement. They are loans mostly given to people involved in injuries that have made it impossible for them to continue with their regular incomes, yet they need money to meet their medication and pay their normal bills to ensure life goes. The premise is that you are given a certain amount of money which you agree to repay with a profit when your case is finally settled.
Kindly note that you only repay the loan if your case results in a successful settlement. It means that if you lose the case and you get a settlement of zero, then you will not be under any obligation to pay the loan.
Before you think about legal funding, you have to meet certain conditions, including but not limited to the followings:
- You have a pending case in court or a settled lawsuit, but you haven’t accessed the money
- You have hired an injury lawyer to help pursue the case
- You have proper documentation giving precise details of what happened, including police reports, eyewitness testimonies, and incident reports
- You have been getting treatment for your injuries since the time the accident occurred.
- You were not the party at fault, occasioning the occurrence of the accident
- Your insurance coverage is enough to take care of all the damages suffered
It is worth observing that it is cheaper to borrow against a lawsuit compared to going for payday loans. But this is not to imply that lawsuit loans are any cheaper, since, both types of lending basically comes with the highest rates in the entire lending industry.
The other thing to point out about lawsuit loans is that the industry is not regulated as the payday loans industry. Both the federal and state governments don’t have any oversight roles in the industry, and as such, the loan is primarily self-regulating. As such, you can never rule out the presence of frauds in the industry, and this is why it is important to take time and explore all your options carefully to avoid any disappointments in the future.
If you are in a position where you consider lawsuit loans as your only option, be sure to work with a reputable lawyer and also work with a reputable legal funding company who has a good history in giving out such loans. This is because if you throw caution to the wind, the financial implications may be more devastating and you could end up regretting why you went for the loans in the first place.