Shop around before selling your Structured Settlement
If you’ve already decided to sell your structured settlement you’ve probably also already begun to look at companies that buy structured settlements. There are dozens of firms that buy structured settlements, and many of them offer great prices for all or a portion of your settlement. But how do you know if you’re getting the right price? Do you need to shop around before picking a company to work with? Or do you have a better chance of getting a good deal if you go with the first offer? Here’s what you need to know about selling your structured settlement and how to pick the very best offer:
Look at Many Different Offers
Because it is a lump sum that you get all at once, rather than structured payments over a long time period, all lump sum offers are going to be less than the full worth of your structured settlement. How much less they are going to be will vary from company to company and should be one of the major factors you consider when you think about who to sell your structured settlement to. It shouldn’t be the only factor, but it should be one of the largest.
Most offers boil down to this: you either get a large amount of money right now, or a little bit more money over the course of your structured settlement. What percentage of your original settlement the lump sum provides will separate the companies you want to work with from the companies you should not consider. Some companies will offer you as little has half of what your original settlement offered, simply because you need the money right now. Others will require only a small percentage off of the top. If you go with the first offer you see, you are unlikely to be getting the very best offer you can find.
Look at Different Discount Rates
When you take out a mortgage, you know that you will actually be paying far more than you original borrowed, when you put interest into the equation. In many ways, selling your structured settlement is the process of getting and paying off a mortgage in reverse.
For example, if you take out a mortgage for $100,000, you will probably end up paying nearly $200,000 for that $100,000 once the mortgage’s term is up, because of the interest the lender adds on top of the principal. Your structured settlement is essentially that larger number (the principal plus interest). When you sell it, you are being offered just the principal, without interest. Of course, you aren’t actually paid interest on your structured settlement if you retain the original payment plan, the analogy simply demonstrates why you get less than your entire settlement when you sell to a company like JG Wentworth.
The percentage that the company takes off of the top is the discount rate. This dictates how much you will be paid when your settlement is sold. For example, if you have $120,000 left in your settlement and you sell at a discount rate of 5%, you will get a lump sum of $94,600—which is a great deal, especially if you need a large influx of cash right now. However, if you are selling at a 20% discount rate, you are looking at less than half of what you would original have made off of that settlement—so be very wary about what discount rates you deem acceptable.
It can be tempting to go with the first structured settlement buyer you find. This would be a mistake. Instead of selling you settlement to the very first bidder, you want to see lots of offers from ls of companies and determine which one is the best for you. Many companies will offer perks or will even help you with the court process that you must go through in order to sell your settlement. These features might sway you towards one company, even if they do not have the lowest discount rate.
When in Doubt, Contact an Expert
If you’re not sure whether or not you’re getting a good deal for your settlement, you should talk to an impartial third party. Of course, all companies will try to tell you how even their high discount rates are a great deal—but if you want to know for sure, ask a lawyer or settlement expert. Never just go with the very first offer you see—because there might be a better one out there
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