Exorbitant Structured Settlements Discount Rates

There could be several reasons why you want lump sum cash for your structured settlements. You may want cash for paying off your medical bills, or you want to pay your college fees, you want to pay-off your debt or you may want to meet some urgent expenses, whatever the reasons it is a fact that most of the people prefer to get one time lump sum cash compare to small monthly or yearly payments.

But the problem is all the companies who purchase structured settlements charge exorbitant discount rates. The national average for such purchasing such settlements is 19%. Companies claim they are buying huge risk from you as it cannot be guaranteed that the paying company will survive for 15-20 years and continue the payments regularly.

If you analyze the figures after calculations you will realize that buying company is taking away a large share from your settlements. For instance, let us assume you are supposed to get $200k in next 10 years, i.e. $1k per month. With a discount rate of 19% it equals to approximately $112k. That means the buying company will get almost $88,000 more from the paying party, which accounts to almost 44% of gross payments!

If you sell your settlement for a rate of 12%, you will get around $140k which will be almost $30K higher than the national average of 19%. So it is in your best interest to bargain for best rates. Try to sell your structured settlement for not more than 10-12% otherwise you will lose a huge sum of money. This is where factoring companies are heading in future.