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.
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contact us today. We are here to answer your questions and help you obtain the
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