Litigation finance has many similarities with other forms of subprime lending, but it’s important to note the differences. Historically, subprime borrowers were defined as having a FICO scores below 640, but this figure has changed over time. These loans are characterized by higher rates, poor quality collateral, and less favorable terms in order to compensate for higher credit risk.
Litigation finance can carry higher rates compared with alternative forms of borrowing. However, borrowers who seek out litigation finance often have no or low credit scores. The collateral is their lawsuit and the outcome is unpredictable. Litigation finance is unique in that it provides liquidity to an illiquid asset. The money can be advanced in as little as 24-48 hours from the time of application, but usually no sooner than 90 days after the accident occurred. Because the money advanced is based upon the case, a credit check is irrelevant. As long as the facts of the case are known, the litigation finance company can offer a dollar amount relatively quick. However, it is difficult to estimate the value of a case if the accident has just happened and the client is still treating. Usually you won’t be able to borrow until 90 days after your accident depending upon how serious your injuries are.