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Applying Structured Settlement Loan As An Alternative – Pros And Cons

Before we discuss how a structured settlement loan could work for you, let us first define what a structured settlement is.. A structured settlement is a financial or insurance arrangement between two parties, usually an individual and a company.

In this situation, the company owes the individual cash. Instead of a lump sum, however, the claimant receives periodic payments. The claimant agrees to the payment scheme. The amount paid to the claimant monthly is a fixed amount.

You will only get the whole amount after a certain period of time. Although the full amount is already in your name, you can only use the fraction that is paid to you monthly. You can do little to change this rule if you’ve agreed to a structured settlement. To shorten the waiting time, some will apply for structured settlement loans to ‘cash-out’ their terms.

But there is a way to access the whole amount with a structured settlement loan. If you are a claimant and you want to access the full amount asap, you can go for a structured settlement loan. A third party is needed for this transaction. The financial company may or may not agree to provide a loan in exchange for your settlement. The decision of taking structured settlement loan should be made after you consult with a legal counsel.

If this still isn’t clear, just remember that the settlement agreement is considered a source of income. Because the money you are entitled to receive in the future is considered as income, you can borrow against it. You borrow against the money that you will receive in the future. In a sense, the structured settlement you are entitled to becomes collateral for a loan.

One drawback is that there may be fees that the company will charge in exchange for the deal. A certain amount may be taken by the lending company. Because it is a loan, additional interest rates may apply.

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