I’m Hesitant to Sell – Can I Just Take Out a Loan Against my Settlement Payments?

A Guide to everything you should know about selling.

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Chapter 5

I’m hesitant to sell – Can I just take out a structured settlement loan?

The short answer is, no, you cannot get a structured settlement loan. Structured settlement loan rates don’t matter because you cannot, legally, take out a loan against your structured settlement. In fact, we did some research and asked loan officers at four different banks, and we also asked four different structured settlement purchasers, and each one agreed that no, you cannot take out a loan using your settlement payments as collateral. But that doesn’t mean that a loan may not be possible for you.

Getting a Loan

There are two basic types of loans that you can get: secured and unsecured. A secured loan is one where money is loaned against collateral – an object that is worth money and can be seized if you fail to repay the loan. You get this type of loan when you buy a house or a car. With a secured loan the collateral can be taken away from you (like having your house foreclosed on or your car repossessed) if you do not pay back the loan. You cannot use your structured settlement payments as such collateral because a structured settlement loan would require court approval and banks are not structured settlement companies, they aren’t going to get court approval.

An unsecured loan is when you are lent money based on your credit score and your signature – there is no object which provides collateral for the loan. Thus, if you default, nothing is taken away from you. Of the five banks that we contacted, two mentioned that you could put your structured settlement payments on your personal loan application as “other income”, thus improving your chances of being approved for a personal loan. So there are no structured settlement loans pros and cons, because there are no structured settlement loans. But if you have questions about getting the money that you need call Strategic Capital today and get all your questions answered.

Know your options!

As you consider your options for getting the money that you need you may decide that a loan works for you. Just understand that a loan is different than selling your payments, and a structured settlement cannot be used as collateral on a legal loan. Usually, a loan will require you to meet certain credit guidelines and then to make regular monthly payments.

Your Structured Settlement is not a Bank Account

Some people will ask how they can withdraw money from their structured settlement account. It is important to know that your structured settlement is not an account like a savings account or even a stock account – you cannot just withdraw money when you wish. It is an annuity, a type of investment that pays out regular, scheduled payments. You cannot take money out of it when you will. You cannot close it and cash it out. You cannot get a loan against it. But you can sell it.

If structured settlement companies tell you that they are giving you a structured settlement loan on your payments they are either misleading you because they are really buying it, or if they truly are giving you a loan, then they are probably doing something that is not entirely ethical or legal. If you want to know that you are working with an honest, legal and ethical company, call Strategic Capital today.