4 Requirements for Getting a Structured Settlement Loan

A structured settlement loan can be issued either prior to a guaranteed recovery on a lawsuit or after a settlement has been issued. If you take the loan prior to finalizing the lawsuit, the loan is a cash advance against an estimated settlement in the future for you to pay your legal fees. If you take the loan after the settlement has been determined, the loan is actually just a way around the terms of your settlement. You can get the money sooner by taking an advance than by waiting for the actual check to come.

#1 Likelihood of Recovery

The first thing a lender will look for is the likelihood you will actually recover the money in your settlement. Borrowers applying before the settlement is issued will face more scrutiny here. Even if the settlement has been issued, however, you will still face some chance the other party will not pay. For example, if you reach a settlement in a divorce, there is no guaranty your ex-spouse will be able to make the payments to you. A lender will want to be assured the party in question has funds sufficient to cover the funds that will be delivered.

#2 Good Credit

Even if a lender knows this money is coming your way, the lender may not believe you are going to be good for the loan payments. Borrowers with a bad credit history will face difficulties with this type of cash advance just as with any other loan. If you have missed payments on your mortgage, personal loan debts, auto debts or even credit cards in the past, a lender has reason to believe you could miss payments on this structured settlement loan. A very large settlement can help you overcome this slightly, but borrowers with good credit will still have a better chance of securing the funds.

#3 Low Debt

Your settlement may be extremely large, but it is worth only as much as you can keep at the end of the month. This means, if you have a number of debt payments to make, you will still not be bringing home a large profit from the settlement. A lender cannot be assured you will be able to repay their loan if you have a handful of other debts that need to be paid off first and that may compromise the total sum you are pocketing once your settlement is reached.

#4 Willingness to Pay High Rates

Once you are approved for a structured settlement loan based on your settlement, credit and debt profile, you must review the terms of the contract. When you see these terms, you may be surprised to realize just how high the fees are to receive the cash advance. A large chunk of your settlement will go out the door if you opt to receive it now instead of on its regular schedule. Only if you are willing to pay these very high financing fees will you be able to secure the loan. Traditional lenders who charge low rates are not willing to extend these risky loan options.


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