The Truth About 'Fixed Fees' in Lawsuit Funding
Some lenders claim 0% interest but charge massive fixed fees. Learn how these multipliers work and why they can cost you thousands.
If you are shopping around for pre-settlement funding, you might see companies advertising "No Interest Loans" or "0% Interest." While this sounds like an amazing deal, there is almost always a catch.
Instead of interest, these lenders charge a "Fixed Fee" based on how long it takes your case to settle. Be careful: these fees often cost you significantly more than a standard interest rate would.
How the Multiplier Works
Fixed fees usually work on a multiplier system. The lender will tell you that you owe a certain multiple of the loan amount depending on when you pay it back.
Let’s look at a real-world example of a $1,000 advance with a typical "1.5 Fixed Fee" structure:
- 0–6 Months: You owe 1.5x the loan amount ($1,500).
- 7–12 Months: The fee jumps to 1.8x ($1,800).
- 12+ Months: The fee jumps again to 2.25x ($2,250).
The Hidden Trap: The "Duration" Problem
The problem with this structure is that you have no control over how long your lawsuit takes.
If your case settles in month 7 instead of month 6, that one month of difference could cost you an extra $300 instantly. If your case drags on for over a year—which is very common in personal injury law—you could end up owing more than double what you borrowed.
Predatory Tactics vs. Transparency
Some predatory lenders use fixed fees or compounding interest rates to obscure the true cost of the loan. They rely on the fact that "1.5" sounds like a small number, hoping you won't do the math to realize it effectively means a 50% interest rate in less than six months.
The Flash Legal Funding Difference
At Flash Legal Funding, we believe in transparency. We don't hide behind confusing multipliers or hidden fee structures. We provide clear terms so you know exactly what you are getting into.
Before you sign any funding agreement, ask yourself: "Do I know exactly how much this will cost if my case takes two years?" If the answer is no, walk away.