Navigating Financial Challenges After a Car Accident: The Role of Lawsuit Cash Advances

According to official New York State statistics, motor vehicle accidents send 136,913 New Yorkers to the emergency department each year. If you are one of these people, you know car crashes can be painful, stressful, and expensive. You could face mounting medical expenses, car repair bills, and lost income from missed time at work.

While car accident lawsuits offer a potentially valuable route to compensation, they may take months or years to resolve. What do you do in the meantime? One option is to seek a cash advance on a pending lawsuit. Here, we explain what a lawsuit cash advance is, what you can use it for, and how to take advantage of this form of financial assistance.

What Is a Cash Advance on a Lawsuit?

Lawsuit cash advances allow you to borrow against an amount you expect to receive from a pending legal claim. Unlike a typical bank loan, most lawsuit funding does not require a credit check or proof of employment. Instead, the lending company will consult with your attorney before offering you a cash advance to discuss your case’s merits and potential value.

While each case is different, according to the Insurance Information Institute, the average auto liability claim in 2022 was $24,211 for bodily injury and $5,313 for property damage. Typically, the lender will offer you an advance of 10% to 20% of your expected compensation amount. If the lender estimates your claim’s value at $30,000, the company may give you between $3,000 and $6,000.

As you learn more about cash advances for lawsuits, know that the service goes by several names:

  • Pre-settlement funding
  • Pre-settlement cash advance
  • Pre-settlement loan
  • Car accident loan
  • Car accident cash advance
  • Plaintiff legal funding
  • Plaintiff investment funding
  • Litigation financing
  • Legal financing

What Determines Settlement Amounts in a Car Accident Lawsuit?

When a judge, jury, or insurance company determines compensation for car accidents, they consider several legal and financial factors. Lawsuit lending companies often consider the same factors when deciding how much to offer you in a cash advance.

Your Damages

Damages refer to the injuries, expenses, and other losses you sustained from a car accident. These include economic damages, such as medical treatment, lost wages, and lost future earning potential. They also include non-economic damages, such as pain and suffering, mental trauma, and loss of enjoyment in life. 

While non-economic damages may garner large compensation awards in jury trials, they are more subjective and harder to calculate. Therefore, a lending company may hesitate to offer you a cash advance on a lawsuit if your losses are mostly non-economic. Greater economic damages, however, often equate to larger cash advances.

Your Liability

New York law allows victims to receive compensation even if they are partially at fault for a car accident. That means you may qualify for compensation even if you failed to follow proper road safety guidelines or otherwise contributed to your injury.

However, a court may reduce the final amount based on your percentage of liability. For example, if you were 30% responsible for the crash, you could collect 70% of the total award. When deciding the size of your cash advance, the lending company may offer you a lesser amount if you share partial liability.

Insurance Policies

Insurance coverage is another key factor in the size of your cash advance and the eventual settlement amount. Insurance company representatives can’t typically offer you more than the maximum coverage amount, and legal lending companies will also use this information to determine your cash advance.

Settlement Negotiations

Finally, how the settlement negotiations proceed can influence your final compensation amount. According to The Law Dictionary, a whopping 95% of lawsuits end in a settlement before trial. 

That means your attorney’s experience, skill, and strategy during negotiations can play a big role in determining your settlement amount. This is one of the many reasons legal lending companies require you to have legal representation before offering you a lawsuit cash advance. 

Car Accident Cash Advances: Final Considerations

A car accident loan can help compensate your financial losses as you wait for your case to settle. Thankfully, you can use your pre-settlement cash advance however you wish. This may include car repairs, medical bills after the accident, and everyday expenses like rent, utilities, and groceries.

When your lawyer receives the lawsuit settlement or award on your behalf, the following will come out of the final amount:

  • Legal expenses, including attorney fees and court costs
  • The lawsuit cash advance you borrowed, plus any fees or interest
  • Any medical liens placed on the settlement by the doctors or facilities that treated you

Seek Car Accident Funding Today

If you’re a personal injury plaintiff, you may need help choosing the right car accident lawsuit loan. Apex Legal Funding offers pre-settlement funding solutions to help ease the financial stress you may experience during your lawsuit.

Our team of experienced lenders is happy to offer free consultations to explain our services and answer any questions you may have. Call us at 800-377-4934 or contact us online to start the process today.

Frequently Asked Questions

How do I borrow against a lawsuit settlement?

To borrow against a lawsuit settlement, you must first have a pending lawsuit filed and legal representation. Then, you apply for a cash advance from a reputable legal lending company. The lender will consult your attorney about your case and determine how much to offer you.

How long does it take to receive a lawsuit cash advance?

After approving your application, many lawsuit lending companies can pay cash advances within 24 hours. This makes them an attractive option for those needing immediate financial help.

How does a lawsuit funding differ from a bank loan?

Pre-settlement lawsuit funding doesn’t usually require credit checks, proof of employment, monthly payments, or collateral. In addition, since they are non-recourse loans, you don’t typically need to repay lawsuit funding if you don’t win your case.