Many people enjoy the regular monthly income that a structured settlement annuity provides, but there are instances when more cash is needed right now than the annuity payments provide. You may be taking a closer look at the face value of your annuity and wondering if you can tap into that value to obtain the cash you need. Some people prefer to sell their annuity when they need a large amount of money, but you may want to borrow against your funds rather than cash out the entire annuity. With a closer look at the options available to you, you can better determine how to obtain your much-needed cash.
What a Structured Settlement Loan Really Is
The term structured settlement loan sounds like you are using the value of the structured settlement annuity as collateral for a loan, but unfortunately, this is not a legally permitted option. Some companies may advertise the fact that they offer a structured settlement loan, but a closer look at the financing terms will indicate that that their loan program is actually an annuity buyout option. They may offer to buy out a portion or even the entire annuity, giving you the lump sum of cash that you need today. However, it is important to note that your annuity payments will either be lowered or will be eliminated altogether as a result. Furthermore, you will not have to make loan payments back to the financial institution.
How to Take Out a Legitimate Loan
In some cases, the sale of a structured settlement annuity makes sense, and some people may be ready to move forward with this process. Others, however, hold firm that they want their annuity payments to continue in full for years to come. If you are interested in taking out a legitimate loan, you can work with any bank or financial institution that offers installment loans. Rather than applying for a secured loan that uses the annuity as collateral, you can apply for an unsecured loan that does not touch your annuity. The loan application and underwriting process may take into account the ongoing annuity payments as a source of income for qualification purposes, but the annuity will not be used as collateral. This is one way to get a loan using annuity funds while keeping your payments in place in their entirety.
Use an Online Annuity Calculator
Before you decide which of these options to proceed with, you should thoroughly review all of your options. Working with your attorney as well as an annuity broker can be helpful as both professionals can assist you with exploring the pros and cons of each option thoroughly. It can also be helpful to use an online annuity calculator. There are multiple calculators each with variations in their functionality. Some will provide detailed information on the lump sum payout you may receive if you sell your loan. Your broker may be able to shop around to gather quotes to sell your annuity in full, and you can use the annuity calculators to more quickly and easily analyze each offer.
Whether you choose to sell your annuity for a lump sum payout or you opt to apply for an unsecured installment loan and keep your annuity payments intact, you can obtain the extra cash you need. There are pros and cons to both options, included a significant financial impact for both. Therefore, take time to thoroughly review each option, and analyze your current and projected budget for both options. This will help you to more easily make an educated decision about how to proceed with your structured settlement annuity.