Judge these loans for legal fees yourself

How can I pay my legal fees with a loan?

There are 2 options if you’re looking for a loan to cover legal fees.

Standard personal loan. With a personal loan you can borrow up to $50,000 unsecured or up to $100,000 secured. Personal loans are generally flexible, allowing you to use the finances however you wish. The funds are paid in a lump sum and you make repayments, inclusive of interest and fees, for the duration of the loan. Most personal loans offer terms from 1 to 7 years.

Specialised personal loan. You may be able to get a loan specialised for financing legal fees. However it may only be available for certain types of cases, such as family law or contested probate proceedings. You should be able to borrow up to $100,000, and in some cases even more, to cover legal fees and associated costs. You’re generally able to borrow a maximum of 30% of your expected settlement in court. The funds are paid directly to your lawyer.

How does a specialised legal finance loan differ from a personal loan?

Although they can both provide funds for your legal expenses, there are some key differences to note.

What can I use the funds for?

Personal loans: You can generally use the funds for anything you like. Be upfront with the lender though and let them know how you plan to use the funds.

Legal finance: You can use the funds for anything related to the legal matter. This is not limited to legal fees. Outside of paying your lawyer for their services, the loan could also fund expenses like alternative dispute resolution, fees associated with valuing, or financial advice. You may also be able to use a part of the loan for reasons like repaying other debts and, in cases of divorce, renovations to increase the price of your home before you sell it.

How can I compare my legal finance options?

When comparing your legal finance options, you should consider:

• Loan amount. Check the minimum and maximum borrowing amounts to help you work out whether the loan will be enough for what you need.
• Loan term. Standard and specialised personal loans have different conditions for their loan term so be sure to check you've got enough time to repay.
• Secured vs unsecured. If you don't have anything to offer as security for the loan, you will need to look at unsecured loans.
• Repayment structure. Do you have to make monthly repayments or will you only have to repay the loan after the settlement?
• Rates and fees. Compare interest rates as this dictates how much extra above the loan amount you'll need to repay. Take note of fees as high fees can drive the cost up even for a low interest rate loan.
• Receiving the funds. See if the lender offers the funds as a lump sum or as revolving credit.
• Loan eligibility. Check with individual lenders for their borrower eligibility criteria and whether they will lend to your specific case.

Our expert says

"When you're doing your research on loans for legal fees, you'll see a lot of companies offering the option. Although they say they are loans for legal fees, very often they are simply just standard personal loans.

While this is a perfectly reasonable solution to pay your legal fees, if you were after a specialised loan you need to read the lender's information carefully. Lenders that offer specialised finance for legal fees will explain that they pay directly to the lawyer and will often have a section of the website dedicated to information for lawyers. They will also have shorter loan terms available, usually up to 12 months."

Rebecca Pike

Senior writer

Am I eligible for legal finance?

With any loan your eligibility depends on the type of loan and the lender.

For standard personal loans, you will generally need to be:

• Over the age of 18.
• Either an Australian citizen or permanent resident.
• Have a good credit score.
• Be receiving regular income over the minimum threshold.
• Be able to provide documentation to prove your ability to repay the loan.

For a specialised legal finance product these lenders will usually only consider certain case types. It’s likely that the lender will ask for security in the form of the settlement you're expected to receive. The lender may not approve your loan if it’s unlikely or unclear that you’ll receive the settlement. That's why specialised finance is usually only available for family law where division of property may be involved.

You should check the lender’s requirements and only apply for the loan only if you’re certain you tick all the boxes and meet their requirements.

What should I be wary of before applying for legal finance?

• Applying for the first loan you see. You won’t know if you’re getting the best deal if you apply for the first loan you find. Compare your options first to make sure you're getting the best deal. Make a shortlist based on cost, terms and eligibility.
• High rates and fees. When you're comparing loan options you'll see that some rates are higher than others. But don't forget to look out for high fees too: the loan's comparison rate can give you a better idea of what you'll be paying.
• Unlicensed lenders. Check the lender you're looking at is legitimate and registered with ASIC. You can also do further due diligence to make sure you trust them by inspecting their website, trying to contact them and reading customer reviews.
• Borrowing more than you can afford. Borrow only what you need and work out the repayments to make sure you won't get yourself into any financial trouble.
• Multiple applications. Every loan application shows up on your credit report and multiple applications within a short period can have a negative impact on your credit score. Find the right loan and lender that suits you and apply to that lender only. If you need to apply elsewhere give it a few more days.
• Long-term repercussions and legal issues. Once you sign a loan agreement, you are bound to its conditions and repaying the loan. There are consequences for not repaying a loan, such as legal proceedings or losing anything you used as security.

How can I apply for legal finance?

1. Work out what type of loan you need, how much you need to borrow and what you can afford. You can use a personal loans calculator to help you.

2. Start comparing lenders. You can use the comparison table on this page for standard personal loans. Take into account interest and comparison rates and find a loan you’re eligible for.

3. Select a lender. If you’re using the comparison table, you can click “Go to site” to be directed to the lender’s page, or “More Info” if you want to read up on the lender.

4. Organise and prepare the required documentation. You'll need proof of identification as well as other personal details. You'll also need evidence of your income and if you're applying for specialised finance, details about the case and any invoices for legal services.

5. Apply. Most lenders have their applications online.

Why compare personal loans with Finder?

Addicted to details. We know taking out a personal loan is something you'll be hooked up with for a while. That's why we put hours into research for this guide (and still do at least once a month)

Rates obsessed. Lenders come in all shapes and sizes, that's why we don't just track the big banks, but all the digi folk too. Pretty much everyone but your parents to be honest.

Cash for whatever you need. Lending rates verified from 180+ products day and night. Whether you're buying a car, rennovating your home or heck just ready to let loose with the spending - we got you.

Frequently asked questions

• Will there be credit checks?

  When you apply for the loan, the lender will perform a hard credit check. This will show up on your credit report. If you wish to extend your loan terms, then another credit check will be done. This is to ensure you can meet your financial obligations.

• Am I able to use the funds for any other purpose?

  If you’re applying for a specialised personal loan, then no. The loan will only be made available for legal and related costs. This may not apply for a standard personal loan.

• Does the other legal party have to know about my financial situation?

  Depending on the circumstances, the other party may be able to apply to court to find out how you’re funding your case. You should check with your solicitor.

• What are the legal costs I might have to pay?

  The legal costs you'll need to pay depend on whether or not you win the case / are found guilty. But typically you will need to cover the cost of the solicitor fees, expert witness costs and administration fees.

  According to LegalAid NSW, some of the costs you might have to pay if you're found guilty are:

  • Court costs levy.
  • Victim support levy.
  • Prosecutor's legal costs.
  • Criminal compensation.
  • Restitution.

• Who offers specialised personal loans for legal fees?

  Specialised personal loans for legal fees are not incredibly common, but there are a few options out there. It's important to check first of all if they fund for the type of case you need to pay for.

  SmartFee

Written by

Rebecca Pike

Senior writer

Rebecca Pike is Finder's senior writer for money. She joined Finder after almost four years writing for business publications in the mortgage and finance industry, including three years as editor of Mortgage Professional Australia. She regularly appears as a money expert on programs like Sunrise and Today, as well as across radio and newspapers. She also holds ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products. See full bio

Rebecca's expertise

Rebecca has written 197 Finder guides across topics including:

• Home loans
• Cost of living
• Budgeting