Compounding interest refers to interest that is added to the principal of a loan or investment, and then earns interest on itself. Simple interest, on the other hand, is interest that is calculated only on the original principal of a loan or investment.

In a pre-settlement financing model, compounding interest can be more expensive for the plaintiff, as it can quickly add up over time. Simple interest, on the other hand, is calculated based only on the original loan amount, which can be more favorable for the plaintiff.

Capital Financing’s simple fee model is beneficial for the plaintiff because it eliminates the compounding interest and only charges a flat fee on the initial loan amount. This can make it easier for plaintiffs to understand and predict the total cost of the loan and can help them avoid unexpected costs down the line. Additionally, Capital Financing may also have more favorable terms and lower rates than other pre-settlement financing companies.

To learn more about Capital Financing and their non-compounding fees, email