If you are looking forward to applying for a structured settlement loan, also known as pre settlement loans, you need to find structured settlement companies that offer this type of loan. But before that, you also need to learn about structured settlement loan rates, what are the best structured settlement annuity companies, and most importantly, what are the Pros and Cons of settlement loans. Before applying for the loan against structured settlements, make sure you completely understand the concept and conditions applied on the loan by the structured settlement companies. In this article, we will discuss the pros and cons of pre settlement loans.
Pros of Settlement Loans
To begin with, structured settlement loans are easy to process as there is no background check, and you don’t have to provide any work history and credit history. This means, even if you have a bad credit score, you can still apply and even get loans against structured settlements.
If you look into it, you actually sell your structured settlement to structured settlement annuity companies, that these companies termed as structured settlement loans. There are many structured settlement companies out of the traditional financial industry like banks that buy structured settlements.
You also don’t have to worry about losing your assets as you don’t use any asset as collateral when you apply for structured settlement loans.
It also depends on the type of loan and the structured settlement loan rates to gauge if you have secured a good deal. For this, you first need to explore different structured settlement quotes to find the best deal.
There are two types of structured settlement loans, one is secured and the other is unsecured. A secured loan is approved against the structured settlement as collateral, which means if you fail to pay back the loan, the structured settlement loan company will seize your structured settlement.
The unsecured loan is provided against the credit score, which means, in case you fail to pay the loan back, the financial institutions can’t seize anything as there is no collateral. Structured settlement loan also protects you from inflation and depreciation of the value of money. As Structured settlement is not adjusted to inflation, getting a lump sum amount as loan provides you protection against future depreciation.
Cons of Structured Settlement Loans
There are some limitations to structured settlement loans as well. First, you need to get approval from the Judge and let the structured settlement companies know about the approval. Without the consent of the judge, you can’t get the loan. Similarly, when you apply for the pre settlement loan, you also need the approval of Judge. This means you need to convince Judge court in the court which is sometimes challenging.
This also makes the process lengthier, as it usually takes three months for the structured settlement annuity companies to release your loan amount. Also, the companies offer you a loan based on the settlement percentage which is mostly around 80%.
The biggest con of the loans against structured settlement is that you are selling it to the company at discount, which means, in the end, you are getting less amount as loan compared to the actual structured settlement amount. In many cases, you will get around 80% to 90% of the actual amount as loan.
Final Words
Structured settlement could be a smart move if you are taking a loan from a good company and have negotiated better structured settlement loan rates. There are a lot of structured settlement companies that offer you quick process and better rates. However, before applying for one, make sure you understand both pros and cons.