Why Would You Want to Sell Your Structured Settlement Payment Rights?
If you settled a personal injury lawsuit, inherited a structured settlement annuity, or are receiving payments from an insurance company, you have a valuable but inflexible income stream. But did you know that you also have options? In 49 of 50 the states, you can transfer the right to receive a portion of or all of your structured settlement payments in exchange for an immediate lump sum.
People sell their payments every day to fulfill any multitude of needs such as buying a home, investing in a business and paying for medical bills.
But watch out- before you even consider this as a way to raise cash, be sure to try to raise your needed funds through a more conventional borrowing. Here’s why:
Your payments are valuable and the income is hard to replace. You have a structured settlement in the first place as compensation for injuries, so make sure you can support yourself when the payments are sold because selling payments is a permanent decision.
Once the payments are sold, they are gone. The truth is, consumer financing options like a personal loan, home equity loan or a business line of credit all carry a significantly lower interest rate and just cost less.
Still Want To Sell Your Payments?
If you have exhausted the other options or don’t have traditional borrowing options and need to raise cash by selling your payments, there are many companies out there who will compete for your business. Let’s look at them:
Pros and Cons of Big Factoring Companies
These larger transfer companies have aggressive sales teams and buy millions in payments every day and then package up the payment streams. The large pool of payments create an ‘asset-backed note’ and this security offering is sold to institutional investors.
Because they have a high overhead and significant ad budgets, as well as shareholders who want to earn money, the larger transfer companies are not always aggressive when pricing your proposed structured settlement transfer. Shopping around may get you a better offer.
On the plus side, the larger transfer companies can at times quote price with a competitive effective discount rate when rates are low or due to market forces associated with their securitizations. Timing is everything when working with a large transfer company to get the best offers on any given structured settlement transfer.