Understanding Lawsuit Loans: What Accident Victims and Their Lawyers Need to Know

Serious car accidents can turn your life upside down. If you’re unable to work and overwhelmed by medical bills, financial relief can feel urgent. That’s why lawsuit loans — also known as pre-settlement funding — may seem appealing. They offer immediate cash while your case is still pending.

For many victims, these loans provide critical support while awaiting a settlement or trial verdict. The primary appeal is that they’re non-recourse — meaning you don’t repay the loan if you don’t win your case.

At Greenstein & Pittari, we’ve worked with clients who’ve used these loans, and we understand the ins and outs. This page outlines what pre-settlement funding is, highlights key legal concerns, and shares guidance for accident attorneys whose clients are considering this option.

Overview of Lawsuit Loans

What Are Lawsuit Loans?

Lawsuit loans are non-recourse cash advances offered to personal injury plaintiffs in exchange for a promise to repay the amount — plus interest and fees — from any eventual settlement or award.

Because they are classified as advances rather than traditional loans, many funders bypass strict usury laws, which cap interest rates. This allows them to charge extraordinarily high effective rates.

While the funders take some risk, they usually only approve loans in cases with very strong liability, where a settlement is virtually certain or liability has already been admitted.

Key Issues for Attorneys

Many personal injury attorneys are wary of lawsuit loans — and for good reason:

• They can complicate settlements by increasing the client’s financial expectations.
• They can reduce the net recovery the client ultimately receives.
• They often require attorneys to acknowledge or certify facts that may conflict with case strategy.

That said, in some cases, clients simply have no other option. When that’s true, it’s our job to ensure they’re protected.

Frequently Asked Questions About Pre-Settlement Loans

What is Pre-Settlement Funding?

A cash advance to a plaintiff in a personal injury case, to be repaid (with interest) only if the case is successfully resolved.

What’s the Interest Rate?

Rates vary widely, often between 27% and 60% per year, with some compounding quarterly or monthly. Always compare offers.

How Much Will I Owe?

That depends on how long your case takes. Many lenders don’t provide a fixed cost. Some offer tiered pricing — for example, a lower cost if the case settles within 9 months, with a cap if it takes longer.

Do I Repay the Loan If I Lose the Case?

No. Pre-settlement loans are non-recourse, meaning you owe nothing if there is no recovery.

When Do I Repay the Loan?

When the case settles or a judgment is collected, the loan and all fees are paid from the proceeds.

What is Pre-Surgical Funding?

If a client needs surgery or treatment and lacks insurance, some lenders pay medical providers directly on the client’s behalf.

Is This a Last Resort?

Yes. Always explore other options first. If you must borrow, only take what you truly need — interest accrues rapidly.

What Are the Funding Limits?

There is no strict minimum or maximum. The amount is based on the value of your case and your immediate financial need.

How Quickly Are Funds Disbursed?

Typically, within a few days via check or wire transfer, once the loan is approved.

Does the Funder Control My Case?

No. The funding company is not involved in legal decisions. The attorney and client retain full control.

Can I Cancel the Loan?

Yes. You have five business days to cancel and return the funds with no obligation or fees.

Can I Repay Early?

Yes. You can repay the loan before your case resolves, potentially saving on interest.

Don’t Be a Victim Twice – Call Now: 1-800-VICTIM2 (1-800-842-8462)

Lawsuit loans can offer short-term relief — but at a high long-term cost. Make sure you’re fully informed before signing.

If you or someone you love has been injured due to another’s negligence, call the experienced New York City personal injury attorneys at Greenstein & Pittari at 1-800-VICTIM2 (1-800-842-8462). We’ll guide you through every step of the process — from injury to settlement — and ensure your interests are protected.

• Free consultation
• No fee unless we win
• Seven locations throughout New York: Harlem, Bronx, Brooklyn, Queens, Staten Island, Yonkers, and Nassau County

Greenstein & Pittari – Don’t Be a Victim Twice – Call 1-800-VICTIM2 (1-800-842-8462)