If you've been injured and have been awarded an insurance settlement or if you've won any amount of money either in court or in a game where the payments will be made over a period of time, it might seem great at first only to become rather annoying as time goes by.
To help correct this, you may want to consider finding a lender to offer you a settlement loan so that you can consolidate all of the payments that you're receiving into a single lump-sum payment.
Of course, getting a settlement loan is not always as easy as some other types of loans since there is almost always some sort of legal aspect involved in the payments that you're trying to consolidate … in most cases, you'll need to have an attorney to set up the settlement loan so that no contracts are broken and the payments are redirected to the proper parties.
The extra work is usually worth it, however, since you will be able to receive years worth of payments at once from the loan and will not have to worry about repaying the loan afterwards.
How Settlement Loans Work
Since settlement loans are not as common as most types of loans, many people do not know how they work if they even know that these loans exist. The process is actually quite simple however, the lender issues you a loan for the amount of your total award, minus applicable fees and charges. Your payments are then redirected to the lender, and serve as the loan payments so that you do not have to repay the lender at a later date.
You do not have to worry about using collateral to secure the loan since the payments will be set up automatically, and the lender does not have to worry about the risk of you defaulting on a larger loan since they will be guaranteed to get theirs money back plus their loan fees from the incoming payments.
Rerouting the Payments
The real trick to getting a settlement loan comes in setting up the transfer of payments. In most cases, the payments that you receive are either court mandated or are considered to be generally non-transferable by the issuing body. You'll have to hire an attorney to set up the legal transfer of the payments from you to the lender … Unfortunately, this will cost a little bit more of the money that you receive.
It's usually best to visit the attorney first, before looking for a lender; many attorneys who deal in this sort of loan already have lenders that they work with, and by letting them set up the transfer and loan you may be able to save a little bit of money in the process.
Receiving the Loan
After all of the legal matters have been taken care of and the settlement loan has been approved, all that's left for you to do is to receive your money and move on with your life. Often, the money from the loan will be deposited directly into your chequeing or savings account or some combination of several different accounts.
In some cases, however, the lender may prefer to issue you a check for the total amount of the loan, or you might prefer to receive a portion of the money in cheque form while having the reminder deposited. The options available will greatly depend upon the lender who grants the loan and possibly on the terms of the transfer as well.