So, you have a settlement and you’re getting monthly payments. Although that’s a really good thing financially, there will come a time where your needs will be greater than the money you’re receiving. The first thing that comes to mind is how you’re going to take care of yourself and your family. Should you take a loan against your settlement?
Avoiding the Loan
When considering taking out a loan out against a settlement, there are many things to factor in. Here are a couple ways that will keep you from taking out a loan:
- Cut Back – Sometimes this is the best option, but one of the hardest to do. Look at your spending and see where things can be cut back. Take your cell phone plan for example. Do you really need a plan where everything is unlimited when you only talk to a small number of people daily? Do you really use all that data that you pay for? If the answer is no, then it might be time to cut back on the plan. Also, look at other expenses and see where some money can be saved. Use that money to pay down debt and purchase your everyday needs.
- Speak Candidly About Your Situation – While it’s something we all do daily, we usually don’t think about speaking to our creditors or those we owe money to about our situation. If you have multiple credit cards, try to find a way to eliminate one or two of them and talk to the credit card companies about your options. Sometimes using a debt consolidation firm can help reduce the amount of money that is going out which will allow you to save more for future purchases.
- Get A Loan – A regular loan from a bank can be easier to acquire than going through the process of getting a loan out of a settlement. The time needed for a typical bank loan is a matter of days, whereas a loan out of a settlement can take upwards of a couple months. Also, a loan from a bank can keep that settlement payments coming in and help pay for the loan from the bank.
- Check the Laws in Your State – Some states make it harder to get loans on settlements. Others will allow them to happen but only if an agreement with the original insurer on the settlement agrees to the terms and conditions of the loan. Check out what your state laws before deciding to take out a loan against your settlement.
The Risks of a Settlement Loan
If this is indeed something that you feel is necessary, then understand that there will be ramifications associated with a settlement loan. Borrowing against your settlement will decrease the overall amount that is left in the settlement. It can be very detrimental to do this if you need those payments each month to cover medical expenses and/or household bills.
Needing a loan is something that many deal with day to day. Finding out the best way to access the loan without doing anything that would hurt your immediate finances is the key. Just because a settlement is there, doesn’t always mean that a taking a loan against is a good idea. Doing some research and knowing what can and can’t be done regarding settlement loans can be the difference in needing to use the settlement and finding other means of getting a loan. Your plans may have to wait a bit, but the time invested in research can be a big help and save you from more problems further down the road.Call Us Today
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