- James Miller
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Delta Lawsuit Loans offers a critical service in the form of non-recourse pre-settlement cash advances.
Our clients come to us because they need money and can’t wait the months or years it can take to reach a settlement.
They need cash after car accidents, slip and falls, and all the other types of cases that we fund.
Lawsuit loans are important and irreplaceable to our clients, but they’re also not free, and any honest lawsuit loan firm will be upfront about its lawsuit loan fees with you.
Lawsuit loan fee is industry lingo for interest, which we charge on our loans just as every bank will charge on their loans.
No, Delta Lawsuit Loans settlement loans aren’t free, but we do guarantee that we’ll match any printed interest rate from another lawsuit loan company that’s lower.
Read on to learn more about lawsuit loan fees generally, the different types of lawsuit loan fees, how our lawsuit loans are worth the fees, and the Delta Lawsuit Loans guarantee.
General Information on Lawsuit Loans
Lawsuit loan fees are how Delta Lawsuit Loans and settlement advance companies like it make money.
Agreeing to fund your lawsuit and not to take a cent if you lose is a massive risk for Delta Lawsuit Loans.
For that reason, our business model requires that the interest rates we tend to charge be, in general, higher than those banks charge.
We’ll get more into the details of why our loans are worth the cost later on. For now, we’ll just talk about what these fees entail.
In a general sense, lawsuit loans are the interest you pay on pre-settlement cash advances.
Why call them “fees” and not simply “interest”? That has to do with the fact that the “loans” we offer are not, in fact, loans.
Rather, they are an advance on your settlement. If you win your settlement, you pay back the advance along with a fee for the service of having received an advance; if you lose, you don’t pay back the advance or the fee.
With a bank, you get a loan with interest, and you pay back the loan with interest regardless of the success or failure of your case.
The interest you pay on your loan is sometimes fixed regardless of how long it takes for your case to settle.
The rest of the time, the amount you pay depends on how long it takes for us to be paid back––in other words, the time it takes you to settle.
It’s important to note that no matter how long your case takes, if you win we get paid only out of the settlement, and if you lose we don’t get paid at all.
Here’s how many times you can get a pre-settlement loan.
Simple Interest Contracts
One type of contract a client can choose is one whose fees are in the form of simple interest.
This may be a good option for a client who thinks his or her case will take a very long time to settle.
That’s because under simple interest contracts, you pay interest only on the principal cash advance and not on any interest that accrues between the initial advance and your settlement.
You can choose to be charged interest on a monthly basis or every six months, but you’ll only pay interest on the principal, not on the principal plus interest.
Because the rate of fees is fixed, simple interest contracts generally have a higher initial cost than compounded interest contracts.
For that reason, clients who believe their case will probably settle soon or not at all would usually be better off with compounded interest contracts.
Simple interest contracts are generally better for clients who believe that their case, if it will settle at all, will take a long time to settle.
Simple Interest Example –– 6-Month Contract
For the purpose of estimating your costs, let’s assume you take out a lawsuit loan for $10,000 under a simple interest contract in which interest is charged every six months. Your lawsuit fees, in this example, are 20 percent.
If you win your lawsuit in one year, that’s two interest billing periods.
At the six-month mark, you were charged 20 percent interest on your $10,000 loan, bringing your total to $12,000.
At the one-year mark, you are once again charged 20 percent interest.
But this is 20 percent of the original $10,000, not on the $12,000 that includes your most recent interest.
So it’s another $2,000, making your total cost $14,000, which is the amount of money we’ll take out of your settlement.
Simple Interest Example –– 1-Month Contract
Another option for a simple interest lawsuit loan is one in which interest is charged monthly.
In this case, if your case takes a year to settle, you’ll be paying interest 12 times.
That would be unreasonable if the interest rate is 20 percent, so it’s a good thing interest rates for monthly contracts will be lower than those for six-month contracts.
For the purpose of this example, let’s say you take out a $10,000 lawsuit loan at 3 ⅓ percent interest, charged monthly.
The first month, you are charged 3 ⅓ percent of $10,000 in interest, or $333.33. Your cost is up to $10,333.33.
You are similarly charged 3 ⅓ percent of $10,000 ($333.33) each month for the next 11 months.
In this case, when your case settles, you’ll owe $14,000, which we’ll take out of your settlement.
Compounded Interest Contracts
Another type of form of lawsuit fees comes in the form of compounded interest contracts.
In this case, the interest charged each month is on your total balance, not on the principal alone.
Each month or six months, depending on the contract you choose, you’ll pay a certain amount of interest, just as with simple interest.
The difference is what you’re paying interest on. With simple interest, you pay interest only on the principal; no matter how long it’s been, you pay the same amount in interest each month or six months.
By contrast, with compounded interest, you pay interest both on the principal and on any interest you’ve accrued to that point.
Therefore, the amount you pay in interest goes up each month or six months. Because of this, compounding interest rates are generally lower than simple interest rates.
Compounded Interest Example –– 6-Month Contract
Let’s take that $10,000 loan we used in the previous examples and say you opted for a six-month compounding interest contract.
Compounding interest rates are lower, though, so let’s say you pay 18 percent interest. Again, your case takes a year to settle.
- The first time you’re charged interest, at the six-month mark, you’re paying 18 percent of $10,000, or $1,800, which leaves your balance at $11,800.
- The second time, at the one-year mark, you again pay 18 percent interest, but on $11,800, not on $10,000. So, this time, you pay $2,124, not $1,800. Your total balance in one year is $13,924.
Compounded Interest Example –– 1-Month Contract
What if you opted to pay 3 percent monthly on that loan?
The first month, you’d pay 3 percent of $10,000, which is $300, bringing your balance to $10,300. We’ll save you some of the behind-the-scenes math, but if you add it up, your balance is up to $11,940.52 by the six-month mark.
When your case settles at the one-year mark, your total cost is $14,257.61, which is the amount we’ll take out of your settlement.
How to Calculate Interest
The formula for calculating simple interest is P(1+rt), where P is the principal ($10,000 in this case), r is the interest rate, and t is the number of times interest is charged.
The formula for calculating compounding interest is P[1+(r/n)]^(nt), where P is the principal, r is the interest rate, n is the number of times per time period interest is compounded, and t is the number of time periods that have elapsed.
The Delta Lawsuit Loans Guarantee
Delta Lawsuit Loans guarantees that we will match or beat the lowest advertised fees for a lawsuit loan if you are approved for a pre-settlement cash advance.
Why Pay Higher Interest for a Delta Lawsuit Loans Lawsuit Loan?
Lawsuit loan fees are generally more expensive than the interest that banks charge. That’s because the higher interest pays for the insurance we provide.
You’re agreeing to pay higher interest if you win insurance against your having to pay if you lose.
We take a major risk when we fund any lawsuit because we agree not to get paid if you lose.
In exchange, we ask for higher fees than banks do if you win. With a bank loan, you’ll pay lower interest, but you’ll pay that interest no matter how your case turns out.
If you win, the interest you pay with Delta Lawsuit Loans may be a bit higher; if you lose, the amount you pay in bank loans will be infinitely more than you’ll pay for a lawsuit loan because you’ll be paying nothing for your lawsuit loan.
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Over his career, James has successfully built and managed several of his own businesses, sold his company, managed hundreds of employees, operated across the United States and Europe, and completed financings for his own companies in excess of $400 million dollars.
James investment and operating experience includes co-founding one of the largest pre settlement companies, a special purpose fund that advanced money to litigants against pending legal claims. He had over $300 million across thousands of case investments, collections, and receivables, a staff of almost 50 employees, operating in 40 states. James built, assembled, and motivated a team of who became the leaders in their field of pre settlement funding. The company offered multiple solutions include attorney funding, plaintiff advances, pre settlement and post-settlement funding, and surgical and medical financing, which enable his clients to receive funds for their case, while the await their settlement.
After selling his business, James now operates a consulting firm which specializes in the lawsuit loan industry. He advises companies how to structure their financing, run their operations, deal with legal issues and collecting on their lawsuit loans. In addition to his consulting firm, James teaches business ethics classes and a local university.
James enjoys teaching, reading, writing and spending time with his wife and two boys.