Understand the Basics of Structured Settlement Loans

One of the first things that you should understand about structured settlement loans is that they are loans on settlements which are generally awarded lawsuits or lottery winnings. Basically these are the awarded settlement that people get in an event of wrong doing. As for lottery winnings, this is an additional choice that winners have which provides them with more money over a longer period of time then the lump sum option.

Sadly there are those who are getting this money that find themselves to be in a place financially where they can not make ends meet. The problem generally does not come with month to month bills but rather with things that are completely unexpected like medical emergencies or accidents. During unexpected situations like this someone who has a settlement might consider structured settlement loans.

How these loans work is that you are taking money now for the money that is coming in on your structured settlement later. This is the money that is actually used to pay back the loan. Basically it allows the borrower to get the money that they need now without having to worry about the terms of repayment since the repayment will be automatic with the structured settlement. There are some things that you should remember if you are looking for one of these special loans.

One of the first things to consider is that these loans are not available everywhere. There are only certain types of financial companies that are allowed to give out structured settlement loans. These can include banks but there are not a lot of banks that actually give out money for these types of loans either.

In addition you must consider both the positive and negative aspects of borrowing money on your structured settlement payments. One of these is that a structured settlement is a form of tax free income and when you get a loan it is taxable. So you are going to lose the fees that you have to pay the lender for borrowing the money and also the money that you have to pay out in taxes which means that you will lose a considerable amount of money.

As for the long term there are times when you might not foresee a need that your future could hold. So if you borrow money on something that is to be paid back in the future and you have no other income at that time then there is a wide variety of other things that you might have to consider. Keep in mind that you could potentially just borrow on a portion of your structured settlement which could solve both problems,
helping you meet an immediate need but leaving you with an income for later too.

Just keep in mind with either one that you must make sure that you read all fine print. You have to understand all of the terms and make sure that there are no hidden fees that you were not previously aware of.