Outrageous Structured Settlement Discount Rates

Selling a structured settlement can be great on many levels. Including, freeing up cash to pay for college, buying a home, or paying off debt. But, the question is, "Why do factoring companies take such a large chunk of the structured settlement or annuity?" The national average of 19.2% for a discount rate is just an absurd figure. Yes, there is a risk factor involved, taking on payments from a company that may not be around in 20 years.

The national average taken from a 2004 California Attorney's General report was 19.2%. If a structured settlement is going to be sold for a lump sum of money, the interest rates have to be much lower. A reasonable rate would be in the range of 10- 13%. With this rate both the factoring and the structured settlement owner would come out very happy.

Structured Settlements

Lets take a 0,000 structured settlement that is getting paid out evenly over the next 10 years. That is ,000 per month. With the discount rate of 19.2% over the next 10 years, equals around 2,000 to the structured settlement owner. The factoring company is taking 44% of the 0,000.

With the discount rate of around 12%, the structured settlement owner would get a payout of around 0,000, that is almost ,000 higher than the national average.

The factoring industry is heading this way in the future. It may take a few years, and a few more stunning reports, but the factoring industry is needed in many ways.

There are more and more structured settlement factoring companies offering great discount rates as low as 8%. These companies are the future of the industry.

Outrageous Structured Settlement Discount Rates