Pre-Settlement financing can get complicated quickly. There are simple fee financing structures and compounding structures available for your clients. In order to know what Pre-Settlement structure is best for your client, let us first look at each Pre-Settlement loan interest model.
Pre-Settlement loans with compounding interest:
Believed to have originated in 17th century Italy, compound interest (or compounding interest) is interest calculated from both the initial principal and the accumulation of interest over set periods of time. Sometimes also thought of as “interest on “interest,” compounding interest accrues at a much greater speed than simple interest. The speed of which the interest grows depends on the number of compounding periods. Quarterly interest periods grow faster than annual periods. Monthly periods grow faster than quarterly periods. Daily periods grow faster than all off the above. A simple, but great example lies within the question, “Would you rather have $1 million dollars or a penny a day that doubles every day for 30 days?” The correct answer is to take the compounding penny. After 30 days, you will end up with $5,368,709.12
Pre-Settlement loans with simple interest:
Simple interest (flat interest fees) are predictable and less expensive to borrowers of loans while growing at a much slower rate. The amount charged daily, monthly, or quarterly are always predictable. This is especially important when considering this structure in terms of Pre-Settlement loans as cases take longer to settle.
Pre-Settlement loans with simple interest and terminating fees:
Terminating fee structures in the Pre-Settlement industry are rare. They provide a unique opportunity for the client to be protected against cases that take longer than expected and offers the law firm a way to gauge how much their client will owe at a defined date unlike non-terminating models that are the norm in the Pre-Settlement industry. Now compare compounding interest and non-terminating structures vs. simple interest and terminating structures.
Why is this important to the Attorney?
Educating your clients of a simple interest and terminating structure for a Pre-Settlement advance, can save your clients thousands of dollars over the long term. If we know clients overwhelmingly complain over how much they owe to Pre-Settlement companies at settlement, why allow them or refer them to the company that charges compounding interest and non-terminating fees? This often causes clients to experience disappointment and anguish and often results in angry complaints directed at their attorneys.
How can Capital Financing help you and your clients?
Capital Financing is a nationally known Pre-Settlement funding company based out of Atlanta, GA. We provide cash advances for people who are waiting for their Worker’s Compensation, or Personal Injury (MVA, Med Mal, Premise, and Wrongful Death). You and your clients can learn more by calling (888) 247-6998 or (404)348-4475 (Georgia).