News and Tips on structured settlement transfers.

Cash

May, 2011


3
May 11

Selling A Structured Settlement – Elements of the Deal

While the idea of selling a structured settlement for a lump sum of cash is undeniably attractive, you should understand what will be involved in the sale of your structured settlement before you dive in.

The Discount Rate.  If you’ve gotten offers to sell your structured settlement, you may have been taken aback at how much less you’re being offered versus the face amount of the payments you are selling.  This is because of the discount rate.  The discount rate is a percentage applied to your stream of structured settlement payments that allows the buyer to calculate the lump sum he will offer you.  This discount rate is intended to cover all of the structured settlement buyer’s costs of the transaction, his overhead (office and staff costs), and, of course, his profit.  Think of it as interest in reverse; if you borrow money, you pay interest in order to use someone else’s money.  So, when you get a lump sum, you are paying a discount rate in exchange for the ability to get the use of your money now, instead of having to wait.

Fees and Charges.  The discount rate, as noted earlier, is intended to cover the buyer’s costs.  This includes the cost of processing your deal.  So, if the buyer tries to charge you a “processing” or “handling” fee in excess of the discount rate, this should be a red flag to you.  You should not have to pay extra fees to sell your structured settlement.

Shop Around.  Don’t be seduced by the initial offer on your structured settlement.  You should always get competing offers from several different companies.  A great way to do this is to use a site like www.quotemeaprice.com, where you can advertise the terms of your settlement and what you want to sell, and let competing buyers give you their best offers. 

Check Out Prospective Buyers.  A simple Internet search of any buyers you’re thinking of using can yield other sellers’ complaints about them.  And, always make sure to check out prospective buyers through the Better Business Bureau.  A typical complaint about structured settlement buyers is that they change the terms of the deal after the initial offer, so be on the lookout for a company trying to do this to you.  Sometimes a company will float a high offer just to get your business, only to cut it down later.  A company may even retract their offer altogether, if they’ve decided that they won’t make enough profit on it.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.


2
May 11

Selling Your Structured Settlement – What to Look For

You should give serious thought to whether selling your structured settlement is the best choice for you.  But if you’ve given it lots of consideration and decided that it’s your best option, here are some potential pitfalls to look for.

Don’t Be Sold on the First Bid.  You should use a site like www.quotemeaprice.com to get bids from competing structured settlement buyers.  Even if the first offer you get is attractive, always get comparative offers.  Don’t let the competing bidders know what the others have offered.  This will ensure that you get independent, objective bids.

Make Sure the Buyer is Reputable.  You’ll likely get bids from the big, well-known players in the structured settlement business, as well as some lesser known bidders.  You should check out all of the bidders that you’re considering using.  Check them out with the Better Business Bureau to see what kinds of complaints have been filed against these companies, and how or whether they’ve been resolved.  Typical complaints are that the structured settlement buyers changed their offer after the initial bid; took longer than promised to complete the sale; or tried to sneak in extra fees and charges.  If you see lots of the same complaints against a structured settlement buyer, you should consider it a red flag, and consider using a different buyer.

Read Everything.  Look over any documents you get thoroughly to ensure that the structured settlement buyer you have chosen is honoring his bid to you, and that he is not trying to add extra fees or charges to the purchase of your structured settlement.  The buyer’s discount rate – the rate by which the structured settlement buyer is reducing the face value of the payments you are selling to the lump sum he is willing to give you – should cover his costs, so if the buyer is trying to tack on processing or handling fees, back out of the deal.  Ask lots of questions and make sure you thoroughly understand what you’re agreeing to.  If the buyer becomes defensive, refuses to answer your question, or tries to convince you that you’re stupid for asking, back away from the deal.

Beware Suspicious Promises.  Most structured settlement purchases take at least 45-60 days to complete, so if a buyer says he’ll get it done sooner, he’s probably making a promise he can’t keep. 

Beware Excessive Pressure.  If anything about the deal doesn’t seem right, if the buyer seems to be changing terms on you or adding fees, you should not sign off on the deal.  The buyer may try to play upon your fears to get you to sign, or may use scare tactics.  Take a step back and don’t let yourself be unduly pressured.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.