Structured settlement loans are designed to give the claimant monetary compensation while they wait for a final ruling from a judge. Yes they do exist and the same companies that would buy structured settlements would offer a structured settlement loan. We know that the structured settlement funding comes from various annuities purchased by the insurance company where the interest earned on the annuity is used to fund the structured settlement payments. However, the money used for a settlement loan comes from the individual company itself and does not involve a complicated financial process. In theory it is simple, you want money now because you feel your case is strong but you can’t wait for the judge to make his ruling and for the structured settlement payments to begin.
There are a few things you need to know before you go after a settlement loan. First of all you will be charged an insane interest rate, somewhere north of 20 or 30%. This means if the value of the settlement is $100,000 and you take a loan for $50,000 you will be losing over $1,000 per month just in interest – more if the settlement amount is higher. So if you are looking for a settlement loan you need to have some really good reasons, and wanting money for the sake of money should not be one. Medical bills, loss of wages, house payments and debt are the only real reasons you should consider a loan and only if the penalty interest for those bills is higher than the interest charged on the loan, otherwise you are still losing money. But if you are filing workers compensation settlement claims then you may be in for a long haul requiring the money now to help you pay bills.
Its easy to be misguided here because the money can seem so far away and because you didn’t earn it through labor it is easy to spend it on things you may not really need. A settlement advance is meant to help you get through the trail, if you need it, not as a down payment on a new ride. The structured settlement payments are designed to give you restitution for the accident or claim. If you spend the money now, or lose money on the interest from the loan you are cutting yourself short in the long run which is why it is great to have a certified structured settlement consultant helping you make the most of your settlement.
Consider things like inflation, the cost of goods rising, consider that on average the wages being paid to Americans is not meeting the cost of inflation meaning we are making the same amount, yet the cost to live is increasing. You may not realize at this moment what future financial burdens may arise as a result of the settlement. If you develop a more serious ailment as a result of undiagnosed injuries your structured settlement loans may have robbed you of the money needed to cover the injury.
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