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What are settlement advance loans?

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Settlement advance loans are loans borrowed against the settlement or judgment plaintiffs expect to receive from a lawsuit, Nolo says. These loans are popular among plaintiffs who have expended a large amount of money on medical bills and need funding to cover mortgage payments, car loans and other living expenses.

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Full Answer

Personal injury lawsuits can take months or even years to settle, according to Nolo. Interest rates on settlement advance loans are often as high as payday loans, running between 27 percent to 60 percent per year. The total interest charged can double or triple the amount of the original loan. As of 2015, settlement advance loans are not regulated by state and federal agencies in the same way as loans from banks or credit unions.

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