4 Common Uses for a Structured Settlement Loan

You can use a structured settlement loan to receive funds immediately for the payments you anticipate receiving in the future on any structured settlement. This includes the extreme scenarios of lottery winners, but structured settlement loans more frequently distribute funds to those who have won a lawsuit and are expecting funds as a result. You can allow the settlement to be paid off slowly over time, but there may be immediate needs that can be met with a loan against the final sum.

#1 Emergency Expenses

If you are facing foreclosure, bankruptcy, an expensive medical payment or another emergency expense, you can take a loan against a future settlement. For example, you may know that your ex-spouse will pay you $50,000 per year for the next 10 years as part of a divorce settlement. This stream of income suits you well for three years, but then you have to have a surgery that will cost $20,000 out of pocket. It may make sense to take a loan against the remaining $350,000 your spouse still owes you. You need the money today, not over the next few years, so you are willing to lose some of the payments to interest in order to meet your emergency demand.

#2 Home Purchases

Buying a home takes a large down payment, and this is cash a lot of people simply do not have. Instead of waiting for your payments to come down the line on a settlement, you can take a loan for a down payment on a home today. The good thing about this option is you are converting the loan amount into personal equity. With the right investment, the equity you gain off the home you purchase will provide you with additional income in the future when you decide to sell. This income can make up for the interest paid on the loan.

#3 Education Costs

Going back to school or sending a child to school is another example of investing instead of just spending the money you gain through a settlement loan. You may know that sending your son or daughter to college will cost $20,000 a year for the next four years. You have a settlement that pays you $10,000 a year for ten years. It would make sense to take the sum now, pay for college, and repay the debt plus interest as the settlements come in. The goal is to provide you or your child the chance to earn a higher salary by using the funds from the settlement as collateral on a loan.

#4 End of Life Enjoyment

If you are retired or nearing the end of your life, a 25 year settlement may not make much sense in your current situation. It would be preferable to take a lump sum settlement today, even if you will end up with less money over all. A loan can provide you with this option. You will have to pay interest, losing some of the money you expect to earn on the settlement. However, you will get a chance to enjoy the money instead of allowing it to set in an account in the end of your life.


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