News and Tips on structured settlement transfers.

Cash

What’s a Good Discount Rate for my Structured Settlement?

The short answer is: whatever you’re willing to pay. 

Here’s the longer answer.  The discount rate is what a structured settlement buyer uses to roll back your stream of payments to the lump sum he is going to pay you.  You can think of it as reverse interest.  When you borrow money from a bank, you pay interest for the privilege.  When you sell your structured settlement, you are giving up a portion of it for the privilege of getting your cash ahead of schedule.  This discount rate is intended to compensate the buyer for overhead expenses, interest he loses on the cash he is giving to you, the time he has to wait for his money, and, of course, profit.

Discount rates charged by structured settlement buyers can easily be in the double digits.  Remember to shop around for competing offers, a process that sites like QuoteMeAPrice make easy.  Check each offer for its discount rate, as well as the turnaround time (how quickly you’ll get your cash) and any other fees the buyer may be trying to charge you. 

You may want to consider whether you truly need the cash, and why.  Is this a true emergency?  Is there some other way to get what you need without cashing out your structured settlement?  If it is a true emergency, ask yourself if there is some other way you can get the money you need without sacrificing your structured settlement. 

As part of the structured settlement factoring transaction (that’s the official term for selling your settlement), most states will require you to get legal and/or financial advice, and that’s a good idea.  Not only can these professionals tell you if the discount rate you’re being charged is reasonable, they may be able to present you with alternatives to selling your settlement that you didn’t know existed.

Another part of the structured settlement process will require a judge to sign off on the factoring transaction.  The judge will need to be convinced that this sale is in your best interest, and this is not a certainty.  If the discount rate is too high in the judge’s opinion, s/he may nix the deal.  However, structured settlement buyers know that this can and does happen, so they will likely keep it in mind when they make offers to you.

Even after all is signed off, there is still one final opportunity to change your mind.  Every state’s structured settlement process provides for a “cooling off” period, usually a few days, which will allow you to walk away from the deal.  Again, selling your settlement is a big decision, and you should take this final opportunity to decide if it’s really for you.

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.

Leave a comment