Most people don’t need a lawyer regularly. So, when they find themselves in a situation where they need legal representation, they might not have the money to pay for the lawyer’s fees. This can cause a stressful situation since you need a lawyer whether you can afford them or not. In a time like this, you might consider taking out a hard money loan. But is it worth it? Before you decide to do so, ask yourself these three questions.
Unlike many loans, a hard loan comes from a private lender and is backed up by physical collateral from the investor. This means that they have a shorter-term length and higher interest rates. If you have any other legal options for paying your lawyer, you should consider them first. If you have a savings account, now is the time to dip into it. Maybe you can ask a friend to help you pay. Or, if you’re going to need to take out a loan, find a different type of loan. A traditional loan from a bank or credit union might be a better option as well since they have more flexibility on term lengths and interest rates. Take some time to look into every option available to you. Depending on your credit score and income, there could be a much better path to take than taking out a hard money loan.
Your current situation will also determine whether a hard money loan is a good idea for paying your legal fees. If you’re working with a personal injury lawyer after a workplace injury, you might have better options. According to the National Floor Safety Institute, slips and falls are the top cause of worker’s compensation claims. They are also the number one cause of work injury for people over 55 years old. Since the legal system has so much experience with these types of situations, there are lawyers that specialize in them. When a lawyer specializes in personal injury, they often give their clients the opportunity to use the compensation to pay their legal fees. Check if your lawyer offers something like this. If they don’t, you might be better off working with a different lawyer who won’t require you to take out a loan to pay your fees.
Since hard money loans are done by private lenders, they might have certain conditions that a bank loan does not. Make sure that you know exactly what the conditions of your loan are. The average hard money loan term is 12 months, though you might be able to get a two to a five-year extension on your payments. One year is a short amount of time to pay off a loan. Unless you have a solid income or settlement coming in, you might not be able to pay off the loan in time after using it for legal fees. Also, make sure you know exactly how much interest you’ll be paying. This will determine the size of your monthly payments, as well as the final amount of money you’ll have to pay.
When you’re working with a lawyer, you will have to pay them a lot of money. However, a hard money loan might not be what is best for your current situation. Before you make any decisions, think about these three questions. The answers will help you determine whether or not you should take out a hard money loan to pay your lawyer. Legal fees are very expensive, but taking out a hard money loan could make certain situations even worse.