What is the Difference Between a Settlement Loan and Cash Advance?
Seek Litigation Funding While Awaiting Case Results
When seeking additional money for lawsuits, you may consider applying for a pre-settlement loan or an advance. Depending on your situation, one of these may work better for you. Make sure you know the difference between a loan and advance before applying for either one.
What is a Loan?
A loan is money that you borrow from a bank or financial institution that you are expected to pay back later. You are also expected to pay interest on the loan until it is repaid in full.
Before a bank approves a loan, it needs to be sure that you have the means to pay it back. This involves meeting a number of criteria such as reliable sources of income, a strong credit history and assets to be used as collateral. If you have a bad credit score, you are unlikely to receive a loan. You may also need to attach collateral to the loan, such as a house, car or a significant cash deposit.
If you are approved for the loan, you generally have to use the money for a specific purpose. If you do not repay the loan, you are subject to fines, lawsuits, liens, property repossession and/or damaged credit.
What is an Advance?
An advance is money taken out of your future earnings. It can come from a bank, your employer or a legal funding company specializing in cash advances. Instead of taking money out with the promise to pay it back, an advance means you are receiving money already due to you before you are meant to receive it. A worker may ask for a $500 advance, and if she receives it, her next paycheck will be $500 lighter. In other words, if you expect to receive a sum of money in the future, you can receive a portion of that money now with a cash advance.
What are the Main Differences Between Advances and Loans?
Loans and advances are similar in that they both provide financial relief to those in times of need. However, advances are less formal than loans, and they carry fewer restrictions. Typically, advance lenders are more flexible about payment schedules and deadlines. This means they do not require a lengthy background check, secured collateral or a strict repayment plan.
In regards to law firm funding, a lawsuit advance is money that will be reimbursed by a future verdict or settlement.
As a lawyer, you may be reluctant to take out a lawsuit loan to fund your practice. This is understandable: loans are cumbersome, time-consuming and restrictive, and they could have long-term effects on your practiceâ€™s legal and financial standing. If you are seeking ways to fund your lawsuit or law practice, consider whether a loan or advance is the best option for you.
How Can I Get Legal Funding Loans?
Beacon Legal Funding offers cash advances to personal injury attorneys and their clients while awaiting a verdict or settlement. You can use the funds however you wish, and we often approve your application within 48 hours of its submission. For more information, call (855) 679-333 toll free, or apply for free using our website.