See what pre-settlement funding really costs before you sign
Pre-settlement funding typically costs 2% to 4% a month, and most contracts compound monthly. That means a $10,000 advance grows to $14,258 in a year at 3% compounding, an effective 42.6% APR. This calculator shows the payoff, the true annual rate, and what actually reaches you after fees.
Cases drag. If you think you'll settle in 12 months, run 18 and 24 too, because the meter keeps running until the check clears.
This calculator is for education only and is not legal or financial advice. Every case is different; talk to a licensed attorney in your state before making decisions.
| Monthly Rate (compounding) | 6 mo | 12 mo | 18 mo | 24 mo | 36 mo |
|---|---|---|---|---|---|
| 2% / month | $11,262 | $12,682 | $14,282 | $16,084 | $20,399 |
| 3% / month | $11,941 | $14,258 | $17,024 | $20,328 | $28,983 |
| 4% / month | $12,653 | $16,010 | $20,258 | $25,633 | $41,039 |
Industry-standard rates run 2% to 4% a month, with some reaching 5%. The columns matter as much as the rows: the same rate costs twice as much if the case takes three years instead of one.
| Time to Settlement | Simple | Compounding |
|---|---|---|
| 12 months | $13,600 | $14,258 |
| 24 months | $17,200 | $20,328 |
| 36 months | $20,800 | $28,983 |
Always ask which one the contract uses; over 3 years the difference is $8,183 on the same advance at the same stated rate.
A lawsuit loan, more precisely pre-settlement funding, is cash now in exchange for a slice of your case later. It's technically not a loan but a non-recourse purchase of part of your future recovery: lose the case and you owe nothing. That structure is why the rates escape usury caps in many states, and why they're so much higher than anything a bank charges. This tool shows the full bill before you sign.
The funder applies a monthly rate, typically 2% to 4% and sometimes 5%, either simple or compounding monthly. Compounding is common, and it's the expensive kind: 2% monthly compounds to about a 26.8% effective APR, 3% to 42.6%, and 4% to 60.1%. Some agreements exceed 150% effective APR. If there's an origination fee, it's added to the principal before interest starts, so you pay interest on the fee too. At settlement, your attorney pays the funder directly out of the proceeds, after their own fee comes out.
Enter the advance you're considering, the quoted monthly rate, and whether the contract compounds. Be honest about the timeline; cases usually take longer than hoped. Then plug in your expected gross settlement and attorney fee to see the waterfall: what the funder takes, what the lawyer takes, and what lands in your account. If the payoff crosses a quarter of the settlement, the tool flags it.
Borrow $10,000 at 3% monthly compounding and settle 18 months later: the payoff is $17,024. On a $100,000 settlement with a 33.3% attorney fee ($33,300), you'd clear $49,676, which is what the calculator's defaults show. The funding cost you $7,024 to get $10,000 early. Whether that trade makes sense depends on how badly you need the money now, which is a real question, not a rhetorical one. Advances usually run 10-20% of a case's expected value, and many funders will cap the total payoff at 2 to 2.5 times the advance. Always ask.
Nothing. Pre-settlement funding is non-recourse: the company bought a piece of your future recovery, and if there's no recovery, there's nothing to collect. That's the one genuinely consumer-friendly feature of these agreements. It's also why funders charge rates that would be illegal on a normal loan.
Published rates typically run 2% to 4% per month, with some reaching 5%, charged either simple or compounding monthly. Compounding is common. That works out to effective annual rates of about 26.8% at 2% monthly, 42.6% at 3%, and 60.1% at 4%. Some agreements exceed 150% effective APR.
Usually not, legally speaking. It's structured as a non-recourse purchase of part of your future recovery: the funder buys a slice of whatever you win. Because you might owe nothing, many states don't treat it as lending at all, which is how the rates escape the usury caps that apply to ordinary loans.
Advances usually run 10% to 20% of a case's expected value, so a claim expected to resolve around $100,000 might support $10,000 to $20,000. Your attorney has to cooperate: funders require the lawyer to sign an acknowledgment and to pay them straight out of the settlement proceeds before you see your share.
Four levers: borrow as late in the case as possible, borrow the minimum you need, prefer a simple (non-compounding) rate, and ask for a payoff cap. Many funders cap total repayment at 2 to 2.5 times the advance, but often only if you ask. Every month you wait to borrow is a month that never compounds.
This calculator is for education only and is not legal or financial advice. Every case is different; talk to a licensed attorney in your state before making decisions.