Understanding all about Structured Settlement Loans

Understanding all about Structured Settlement Loans

You can get structured settlement loans in almost all US states. Most often, people enter into structured settlements to receive compensation from companies or individuals after lawsuits. This benefit is paid over a period of time and in equal installments. These contributions are mostly in the form of a life insurance contract, which can also be used as collateral for obtaining loans. The application procedure for structured loans is easy and fast.


If you want to apply for a loan, you first need to understand the type of structured arrangement you have. It would be a mistake to apply for a loan when your structured agreement has a clause that you cannot take out financial leverage or loans using the document as collateral. However, if there are no such restrictions, then you can apply for a loan. The court’s permission will still be required if a settlement is reached under its instructions.

You will also need to seek permission from the defendants and the insurer if you have reached an out-of-court settlement in your personal injury case. You can immediately start the loan application process once you are sure that there are no legal restrictions or obstacles.


The financial institution or bank may accept your loan application after reviewing and evaluating all the documents. In some cases, processing may take 90-120 days. On the other hand, selling your annuity won’t take as long as you can get cash in 45 days or less.

You will have to pay fees after your application is processed and the loan is approved. This fee and certain other fees and several jurisdictions also deduct some income tax on the loan amount. However, you can spend the loan amount as per your needs and pay it back with annuity payments.

Comparison with settlement sales

You should compare the sale of a settlement agreement with paying off your loan. If you have to sell an annuity then you may have to pay more fees and there will also be some tax deduction. This will terminate your settlement agreement and you will not receive any payments in the future. If you take out a structured settlement loan, your original settlement plan will remain intact, but you will need to repay your loan with these payments.

Most of the annuity buyers buy only 50 percent of the settlements, but most of the loans are spread over almost 100 percent of the payment plan. This offers much better leverage to all borrowers as they can spend on a range of options including property investment.

Check the credentials of the structured settlement loan lenders you are considering. It is preferable to hire an attorney because they can review the loan contact documents before you sign them and will ensure that you understand the terms of the loan, the interest rate, and other terms. Also check for hidden costs and fees that were not discussed during the initial stages. Familiarize yourself with the current interest rates on structured settlement loans to ensure that you are not charged outrageously high rates.

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