Lawsuits don’t move fast, even when the outcome feels obvious. In some cases, years can pass before you receive the money you’re owed.
However, expenses don’t stop while you’re waiting.
With everyday costs, medical bills, and everything in between adding up fast, the waiting period can put serious financial strain on many plaintiffs.
That pressure is why more people are turning to pre-settlement loans—advances against an expected settlement.
And the demand is only expected to continue growing, with the global litigation funding investment market projected to reach $51.09 billion by 2036, even though it was valued at “just” $20.64 billion in 2025.
But popularity doesn’t equal value, so the question remains: Are pre-settlement loans actually worth it?
This guide breaks down everything you need to know to make that call.
Key takeaways
- Pre-settlement loans give you early access to future settlement money, but at a cost
They are cash advances based on your expected settlement, not traditional loans. You usually receive 10% to 20% of your estimated case value, and whatever you borrow comes out of your final payout later. - How and whether you repay depends entirely on the loan structure
With non-recourse funding, repayment only happens if you win or settle. With recourse funding, repayment is required even if you lose, using your own money. This distinction matters more than the interest rate. - Approval is based on your case, not your credit
Funding companies evaluate case strength, damages, insurance coverage, liens, and legal representation. Your credit score is irrelevant, but weak cases or low recovery potential often get denied. - Pre-settlement loans can help or hurt, depending on timing and terms
They can reduce financial pressure and give you leverage to negotiate, but fees grow over time and can significantly shrink your final settlement if the case drags on. Always weigh short-term relief against long-term cost. - Before borrowing, check for free money you might already be owed
Class action settlements, refunds, and recalls can provide real cash with no fees and no impact on your lawsuit. Tools like Settlemate automatically find and claim this money for you, helping reduce how much you need to borrow or avoid a pre-settlement loan altogether.
What is a pre-settlement loan?
A pre-settlement loan—also known as lawsuit funding or a settlement advance—is cash you receive before your case is resolved, based on the settlement or verdict you expect to receive later.
Despite the name, it’s not a traditional loan. It’s a cash advance tied to your case, typically repaid directly from the settlement or judgment once the case ends.
If your case is large enough, you can take out more than one advance, though each one increases how much comes out of your eventual settlement.
The amount you can receive is usually a percentage of the estimated case value, most often 10% to 20%. In practice, advances can range from a few hundred dollars to six figures or more, depending on the strength and size of the case.
But while the size of the pre-settlement loan varies, one aspect stays the same: The money is yours to use however you’d like.
Most people use it to cover expenses they still have to pay while their case is ongoing, such as:
- Medical bills
- Legal fees
- Rent or mortgage payments
- Utilities
- Car expenses
- Credit cards
- Child support
The funding itself comes from third-party pre-settlement funding companies, not from law firms; lawyers aren’t allowed to give clients cash advances due to conflict-of-interest rules.
The common types of pre-settlement loans
Not all pre-settlement loans work the same way. Their structure matters because it primarily determines whether you repay the loan in the end.
The table below breaks down the main types of pre-settlement funding and how each one works:
Repayment happens only after your case concludes.
If you win or settle, funds are distributed in a set order: Lawyer’s fees, litigation costs, and medical liens are paid first. The funding company is then paid from what remains. This is typically handled directly by your lawyer, so you’re not writing a check yourself.
If your agreement allows early repayment, paying the advance back sooner can reduce total fees, especially in cases where costs accrue over time.
If you lose and you’ve agreed to recourse funding, the lender will collect under the terms of the contract, which typically implies repayment from your own funds.
How to get a pre-settlement loan: A step-by-step guide
Getting a pre-settlement loan involves several steps, but the process is generally straightforward. Here’s what to do:
Step 1: Confirm your case is eligible
Not every lawsuit qualifies for pre-settlement funding. Approval depends largely on the type of case and whether it has a clear path to settlement or judgment.
In general, funding companies look for cases with established legal frameworks, identifiable defendants, and a realistic chance of recovery.
The table below should help you determine whether your case is likely to qualify:
Step 2: Find a reputable funding company
Finding a pre-settlement funding company isn’t as simple as picking a lender. Traditional banks don’t offer loans based on pending lawsuits, so you’re dealing with numerous private funding companies in a loosely regulated market with uneven standards.
That makes comparison critical.
So, before choosing a company, request a written quote and review the terms closely, paying attention to how fees are calculated, not just the advertised rate. The goal is to avoid compounding or hidden fees.
Reputable companies typically:
- Offer simple interest
- Give non-recourse funding
- Explain repayment terms clearly
- Don’t pressure you with aggressive sales tactics
- Don’t rush you with “limited-time” offers
Independent reviews and complaint histories can help flag repeat issues before you commit.
Step 3: Apply for the loan
Once you’ve chosen a company, the application itself is quick. You’ll apply online or by phone and submit basic case details, including relevant legal documents and your lawyer’s information.
Step 4: Let the company review your case
This step is the core of the process, because the funding company evaluates the strength of your case, not your personal finances.
During review, funding companies typically look at:
- Type of case or accident: Some case types have clearer legal paths and more predictable outcomes, which lowers risk for the lender.
- Extent of injuries: More serious, well-documented injuries usually support higher potential settlements.
- Medical bills: These help establish damages and give context for the case’s value.
- Existing liens: Medical or legal liens reduce what’s left to repay the advance, which can limit how much funding is offered.
- Defendant’s insurance and policy limits: Even strong cases are capped by how much coverage is available to pay a settlement.
- Likelihood of a favorable outcome: The stronger the facts and liability, the better your chances of approval.
- Attorney and case handling: Experienced legal representation signals that the case is being actively and competently pursued.
Step 5: Wait for approval
After review, your funding request is sent to underwriting. If approved, you’ll receive a clear, written contract outlining the advance amount and terms.
Approval typically takes anywhere from 24 hours to about a week, depending on how quickly case details are verified and your lawyer responds.
Step 6: Review the contract carefully
Reading a contract carefully is always important, but with pre-settlement loans, it’s critical.
The American Bar Association has flagged pre-settlement funding agreements as an area where unclear terms, excessive fees, and ethical conflicts can create real problems for plaintiffs if they don’t fully understand what they’re agreeing to.
So, before you sign, do the following:
- Confirm how fees accrue and how fast the balance grows.
- Verify repayment rules, especially what happens if you lose the case.
- Look for caps or limits on how much you can ultimately owe.
- Make sure there are no vague or buried terms.
- Have your lawyer review the contract.
Step 7: Receive the funds
Once you accept the offer, funding moves quickly. In many cases, you’ll receive the pre-settlement loan within 24 to 48 hours, depending on the payment method you choose.
The pros and cons of pre-settlement loans
Pre-settlement loans can solve real short-term problems, but they’re not free money.
Whether they help or hurt depends on your situation, your case timeline, and the terms you accept.
These loans can be beneficial because they help you:
- Buy time to negotiate, reducing pressure to accept a low settlement just to get cash
- Reduce financial stress, letting you focus on recovery instead of juggling overdue bills
- Avoid other debt, especially if traditional credit isn’t available
That breathing room can matter. Having cash on hand often means you and your lawyer can wait for a fair offer or go to trial if needed.
However, pre-settlement loans can also work against you because they:
- Shrink your final payout, since advances and fees come directly out of your settlement
- Become more expensive over time, especially if your case takes months or years to resolve
- Expose you to weak consumer protections, depending on your state and the lender
The right way to evaluate a pre-settlement loan is to compare what the money solves today against what it costs you later.
If the advance helps you avoid eviction, cover medical care, or keep you from accepting a lowball settlement, the tradeoff may be justified. If it’s covering expenses you could reasonably manage another way, the cost may outweigh the benefit.
Before you borrow, check for free money first
Pre-settlement loans can help, but they cost money. So, before you borrow against a future settlement, it’s worth checking whether there’s money you’re already owed that can ease the pressure now.
Billions of dollars from class action settlements, product recalls, price adjustments, and other overlooked refunds go unclaimed every year simply because people don’t know they qualify or don’t have time to deal with the paperwork.
That’s where Settlemate fits in.
Settlemate is a consumer fintech app designed to help you claim “found money” or cash you’re legally entitled to, with no borrowing, no fees, and no impact on your lawsuit.
It’s especially useful if you’re dealing with financial strain while waiting for a settlement and want to reduce how much you need to borrow (or avoid borrowing altogether).
Settlemate helps by:
- Automatically scanning your email and purchase history for eligibility
- Matching you to open settlements and refund opportunities
- Auto-filling and submitting claim forms (even mailing them when needed)
- Tracking claim status and deadlines in one place
With Settlemate, there are no downsides—just money you might otherwise leave behind.
Download Settlemate on the App Store or Google Play to start claiming what you’re owed today.
