Factoring in Factor Rates: 4 Points to Know

If you’re planning to work with Lawsuit Financial in the near future, or if you’d simply like to know more about the math behind cash advance loans, you’ll probably come across the term “factor rates.” What are they, exactly? When you receive a cash advance, how will they figure into the money you’ll pay back? It may seem like a foreign concept, but you don’t have to be a financial expert to understand factor rates. Keep reading to get a solid overview of the basics.

  1. What is a factor rate?

When you get a loan from the bank, you eventually need to pay back the total, along with an extra percentage called an interest rate. Your  bank gives you this interest rate to calculate how much you’ll really have to pay back. Factor rates are similar, but with a few key differences. They typically show up in the form of decimal figures, like 1.1 or 1.5. Your factor rate will tell you exactly how much you’ll owe when you’re ready to pay back the money you borrowed.

  1. When are factor rates used?

While interest rates are typically used for loans, factor rates are used for cash advances. Sometimes, these are referred to as  merchant cash advances or business cash advances, because small businesses often use them as short-term financing tools. In our case, they’re called lawsuit cash advances, designed to support you financially while you wait for a decision on your pending lawsuit.

  1. How do factor rates work?

Factor rates are completely different from interest rates or APR. When you use interest-based financing, your interest payments get smaller as you pay off the loan. That’s because interest builds on the current balance of your loan account. When it comes to factor rates, the interest is paid up front. You’ll only do the calculations once using the original loan amount.

  1. What will you actually pay back?

To calculate the total amount you’ll need to repay, just follow one very simple formula: multiply the loan amount by the factor rate. Let’s say you’re getting a $10,000 cash advance at a factor rate of 2.0. Your calculation will look like this: $10,000 x 2.0 = $20,000. Your actual rate will depend on your lender’s policies and your particular situation. How you repay is between you and your lawsuit funder.

At Lawsuit Financial, we pride ourselves on helping people who need fast financial solutions in the face of a pending lawsuit. Once you’re approved, we can provide you with a cash advance within 24 to 48 hours, along with a reasonable factor rate based upon the outcome and potential value of your case.  And, the entire amount is excused if you lose your case or it may be adjusted to offset poor results in the case.  We are here to help and we try to be as fair as circumstances require. Call us to schedule a free consultation and see if you qualify. We hope to be of service.

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Lawsuit Financial, Inc.

At Lawsuit Financial, we’ve seen it all. When you come to us for help, you are benefitting from a unique combination of years of legal and legal funding experience, especially, the wisdom of one of the founders of the lawsuit financing industry. We treat everyone with exceptional professionalism, and we always do what is in the best interest of the client and the litigation.

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