At a Glance

In the wake of an accident or injury, many people feel overwhelmed by mounting medical bills and the financial toll that can come with recovery. A personal injury loan is a type of loan specifically designed to provide financial assistance to people who need money while they are waiting for their personal injury claim to be settled. This type of loan can be a necessity for those who don’t have the financial resources or credit score to access other types of loans. Let’s take a closer look at how personal injury loans work and what you should know about them.

In this article, you’ll learn:

What is a personal injury settlement loan and how does it work?

A personal injury loan, also commonly known as a pre-settlement loan or a lawsuit loan, is a type of specialty loan designed to help plaintiffs in personal injury cases get access to cash before settling their case. This can help eliminate the financial stress and uncertainty that may be associated with long legal proceedings by providing funds to cover medical bills, legal expenses, and other costs associated with the injury until receiving compensation from the lawsuit or claim.

This type of loan is typically offered by specialized lenders who understand the unique circumstances surrounding personal injuries and the long-term costs associated with recovering from them.

Are personal injury loans the same as conventional personal loans?

Personal injury settlement loans and personal loans are not the same. Personal injury loans are specifically designed to help plaintiffs in personal injury cases get access to cash before settling their case. Conventional personal loans, on the other hand, are usually used for different reasons, such as to consolidate debt or cover a large purchase.

Additionally, personal loans often involve collateral and a credit check whereas personal injury loans don’t require collateral or a credit check. The terms of the injury loan, i.e., interest rate, repayment schedule, etc., will be based on the strength of the plaintiff’s case, rather than their credit score.

Who is eligible for a personal injury loan?

If you have suffered an injury at the hand of another party, such as in a car or bicycle accident, medical malpractice, or a work-related injury, you may be eligible for a personal injury loan. Personal injury lawsuit loans are typically available to people who have filed a personal injury lawsuit and have a strong case. Depending on the lender, you may or may not need to have a lawyer representing you.

Additionally, some lenders will only consider applicants who have already settled their cases and are awaiting payment. However, many lenders also offer pre-settlement funding to plaintiffs who do not have the financial resources to pursue their case, so if you are seriously injured but haven’t yet opened a case, it’s worth researching lenders to understand your options. Each lender has its own criteria when it comes to eligibility and will assess each application on a case-by-case basis.

How to apply for a personal injury lawsuit loan?

The application process for a personal injury loan will vary from lender to lender. In most instances, however, you will need to provide evidence of your case in order to apply. This may include medical records, police reports, photographs, or other proof that documents the incident and its aftermath. Additionally, lenders will typically require an attorney’s opinion before they can approve a loan.

Because application processes and criteria vary from lender to lender, it’s important to do your due diligence when looking for a personal injury loan. Be sure to compare multiple lenders to find the best rates and terms for your specific situation.

Related: How Do Lawsuit Loans Work?

Pros and cons of personal injury funding

One of the biggest benefits of taking out a personal injury loan is that it helps keep your finances afloat while your case is pending. It can help cover medical bills and other expenses associated with your injury that wouldn’t normally be covered by your insurance company or lawyer’s fees. It also gives you peace of mind knowing that there is extra money available should an emergency arise during the course of your case or settlement negotiations.

That said, loans on personal injury cases come with interest rates that are compounded monthly, which can add up quickly if your case goes on for years. This means that you could end up owing the entirety of your settlement to the lender if you win your case. If you do need to rely on a lawsuit loan, make sure to carefully read the terms and conditions of the agreement to find the best loan with the lowest possible interest rate and a repayment schedule that works for your situation.

Another pro to taking out a personal injury loan, however, is that personal injury loans are typically non-recourse loans, meaning you, the borrower, doesn’t have to pay back the loan if you don’t win your case.

Cost of personal injury loans

The cost of a personal injury loan will be determined by the overall loan amount and the terms of the loan agreement. The loan amount and terms will depend on various factors, including the damages, any insurance coverage, and the strength of the case.

Generally, if you win your case, you’ll have to pay out a portion of your lawsuit proceeds to the lender to repay the loan, which will be agreed upon with your lender before confirming the loan. This will cover the loan amount plus interest, which is compounded monthly and typically ranges from 3-4%. While this interest rate may seem lower than that of other loans, the fact that it is compounded monthly means it will add up quickly. To avoid paying more than you need to, make sure to go with a lender that has a maximum payback amount.

It’s important to be aware that personal injury loans can also come with origination fees, processing fees, and other charges which vary from lender to lender. Make sure you understand all of the terms and conditions of the loan before agreeing to it.

Common personal injury loan terminologies

As mentioned above, personal injury loans are also referred to as pre-settlement loans or lawsuit loans. Other common terms associated with personal injury loans include:

  • Principal amount – The amount of money borrowed from a lender.
  • Origination fee – A fee charged by a lender at the beginning of the loan process to cover administrative costs.
  • Loan term – How long an individual has to repay their personal injury loan, usually specified by months or years.
  • Tort feaser — The individual responsible for causing harm to another through their negligent or wrongful act, who is then liable for any damages incurred.
  • Legal claim — The right to sue another person or party.
  • Minimum return fee — A fee charged by the lender if the borrower’s settlement is not enough to cover the principal amount of the loan and interest.
  • Payment schedule — A schedule that outlines when payments are due.
  • Fee cap — The maximum you will pay in fees, regardless of the length of your lawsuit.
  • Lawsuit cash — The cash advance received by the plaintiff.

Knowing these terms will help you better understand personal injury loans as you research lenders and navigate your case.


Personal injury lawsuit loans can be a high-risk form of financing if you don’t do thorough research to find a trustworthy lender and loan agreement that works for your situation. It’s important to do your due diligence in order to compare rates and fees between different lenders, as well as understand the repayment terms before signing any paperwork. If there are high interest rates and no fee caps, you could end up owing far more than you originally borrowed. However, if your lawsuit is unsuccessful, you won’t still be responsible for repaying the loan.

Some online lenders will approve you for a personal injury loan in as little as 24 hours. However, it’s important to take your time to thoroughly research lenders and discuss the loan agreement with your attorney and lender to ensure it is right for you before proceeding.

Personal injury loans are designed solely to provide financial assistance to those who have suffered an injury or illness due to the negligence of another party. While they cannot be used for any other purpose, they can be used to cover any expenses or emergencies that arise due to the injury. For instance, if the injury makes it impossible for you to work, the funds can be used to cover regular monthly bills that you are unable to pay.

Yes, you can get a personal injury loan while waiting for your personal injury settlement. This can be a helpful option for covering medical bills and legal costs until you receive compensation from your settlement. It’s important to understand how these loans work before applying for one and always make sure to research different lenders in order to find the best rate possible. With careful consideration and research, a personal injury loan may just be the solution you need when dealing with unexpected costs during times like these.