What Is a Settlement Advance? Are Personal Injury Lawsuit Loans Worth It?

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For some individuals, a personal injury lawsuit settlement may be a lifeline to some financial freedom. Unfortunately, many of these cases can take months or years to settle, but the plaintiff has a financial need now. In such a situation, a settlement advance may be something the plaintiff wants to consider, so we are going to take a deeper look at settlement advances on personal injury lawsuits and if they are worth it.

What Is a Settlement Advance?

If you have a personal injury lawsuit in the works and finances are tight, a settlement advance/loan is something that may be floated as a way to get yourself out of the hole. It could be a tempting solution, but you should know these do not function like typical loans.

Basically, you are being fronted money based on the likelihood of a positive settlement in your pending case. That “advance,” however, comes at a price, usually in the form of a very high interest rate.

Cases Eligible for a Settlement Advance

The most common types of cases eligible for settlement advances are:

How Do Settlement Advances Work?

In order to be eligible for a settlement advance, you will have to have already filed a lawsuit. The company issuing the loan will evaluate the case and offer terms based on how it weighs the likelihood of a favorable decision on your behalf.

The loan offer is likely to be far less than the lawsuit is worth as in many cases, if you lose the case, you may not have an obligation to repay the loan. On the flip side of that, if the case does settle in your favor, the loan company will generally have the loan repaid immediately out of the settlement, including the interest, which could range anywhere from 20 to 60 percent (hence why the loan offer will be considerably short relative to the value of the case).

These interest rates are so high due to the risk the loan company is taking on for offering the loan (as mentioned above, they stand to lose all the money if the case is decided in favor of the defendant).

Pros and Cons of a Settlement Advance

If you are considering taking a personal injury loan before the case settles, here are just a few of the pros and cons in making the decision:


  • You will get the money you need right now
  • Credit score generally does not factor into the loan approval
  • The money is generally received very quickly
  • This gives your attorney more time to negotiate the case since you already have the money you need


  • As stated above, interest rates are ridiculously high, with recent studies showing that the average interest rate for such a loan is right around 45 percent.
  • Interest fees can eat up a good portion of the settlement if the case drags out
  • These types of loans are not heavily regulated, which gives the lenders a lot of freedom in finding ways to charge extra fees and interest

Is a Personal Injury Lawsuit Loan Worth It?

The answer to that question is largely going to depend on your current financial needs. If you are looking at this solely from a financial perspective, the answer would be a no, because you are going to lose considerable money to interest and fees. However, if you are backed into a corner and this is your only financial resource, paying the excess fees and interest is secondary to paying off the debt you have right now.

There may, however, be alternatives before you go down this path.

Personal Loan – if you have good credit, a persona loan is a very real alternative. Today, borrowers have more options than ever, with credit card companies offering decent terms and companies like Lending Tree offering loans for far less than you would ever get from a settlement advance company.

Low-interest Credit Cards – again, if you have good credit, applying for a low-interest credit card can be a good stop-gap measure to stop the financial bleeding. Most new cards come with transfer offers, which would enable you to transfer the older debt to the new card, giving you a much bigger window for paying down your debt.

Friends and Family – borrowing money from friends and family can be a bit dicey, but it is probably a far better route to go if you have someone willing to work out reasonable terms with you.

Need help with a personal injury lawsuit? Our legal team would love to help. If you have a possible case and would like to discuss it with our team, give us a call at 855-633-0888. Or, if you would like to learn more about our legal services before contacting us, click here.

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