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You can get a structured settlement loan in almost all states in the US. Most people enter into structured settlements after lawsuits to receive compensation from companies or individuals. This compensation is paid over a specified time period and in equal installments. These installments are mostly in the form of life insurance agreements which can also be used as collateral for availing loans. The process of applying for a Structured Settlement Loan is simple and quick.
prerequisites
If you want to apply for a loan, you must first understand what kind of structured settlement you have. It would be a mistake to apply for a loan when your structured settlement has a clause that you cannot avail financial leverage or loans using the document as collateral. However, if no such restrictions exist, you can apply for the loan. The permission of the court will still be required if the settlement is made under its directions.
If you have reached an out of court settlement for your personal injury lawsuit, you will also need to get the defendants’ and the insurer’s permission. Once you are sure that there are no legal restrictions or hindrances, you can start your loan application process immediately.
Application
The financial institution or bank may approve your loan application after examining and evaluating all the documents. In some cases, processing may take 90-120 days. On the other hand, it won’t take as long to sell your annuity as you can get the money in 45 days or less.
Once your application is processed and the loan is approved, you need to pay the fee. This fee and some other fees and some jurisdictions also deduct some income tax on the loan amount. However, you can spend the loan amount as per your requirements and repay it along with the annuity payments.
compared with disposal sale
You should compare the sale of settlement agreement with the disbursement of your loan. If you have to sell the annuity, you may have to pay a higher fee and there will be some deduction in taxes as well. This will end your settlement agreement, and you will not receive any future payments. If you take the loan on Structured Settlement, your original settlement plan will remain intact, but you will have to repay your loan with these payments.
Most annuity buyers purchase only 50 percent of the settlements, but most are spread over nearly 100 percent of the loan payment plan. It provides better benefits to all who take the loan as they can spend on multiple options including investment in property.
Check the creditworthiness of the lenders of the structured settlement loans you are considering. Preferably hire a lawyer as they can check the loan contact papers before you sign them, and they will ensure that you understand the loan terms, interest and other terms. Also check for any hidden costs and fees that were not discussed in the initial stages. Familiarize yourself with the current interest rates on structured settlement loans to ensure that you are not being charged an outrageously high rate.
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