Moolah. Cheddar. Dough. The Almighty Dollar.
Some people say money isn’t everything, but it’s entirely possible that they’ve never been without it. The truth is, getting money often becomes the priority when the chips are down and you’re trying to get above water on the financial front. While some options like payday loans or credit card advances may seem like smart ways to get money quickly, these choices can mean bad news for your wallet in the long-term. Even personal loans might seem like a promising option at first glance, but the financial repercussions of them can result in accumulating more debt than what you started with. Here’s some insight on why you should steer clear of the “obvious” choices and instead, consider selling your structured settlement for a lump sum of cash.
Why Loans for Aren’t Great Options for Fast Cash
Nerdwallet defines a personal loan as “money borrowed from a bank, credit union or online lender that you pay back in fixed monthly payments, or installments, typically over two to five years.” Not too shabby, right? Well…it could be. Most personal loans are “unsecured,” meaning that they’re not backed by collateral. And typically, personal loans are granted to people with decent credit. The better your credit score, the better your rate is likely to be. But if you’ve been late on payments in the past, getting approved for a loan might be a challenge. Even before you step foot into a bank, you should know that you could get denied or come away with a loan with a sky-high interest rate.
Business and payday loans can be equally as bad. Keep reading to learn more.
Additional Drawbacks of Personal Loans
ValuePenguin estimates that for individuals with average to poor credit scores, interest rates on personal loans can range anywhere from 18% to 36%! Whoa, might as well get a credit card at those rates. Even for those with excellent credit scores, loans can still be problematic. According to ValuePenguin, most people are approved for loans at interest rates of 10% to 12%. There’s also some short-term credit score damage and fees to contend with.
When you sell your structured settlement, the money is yours with no interest or principal repayment. The best part – your credit score has no impact on the amount you’ll receive. If you go to a reputable buyer (like RSL Funding), to sell structured settlement payments, you won’t have to deal with additional fees either.
The Pitfalls of Business Loans
Business loans can carry lower interest rates than personal loans; however, interest rates vary widely, ranging anywhere from 5% all the way up to 78% depending on where you get your loan, according to ValuePenguin.
Additionally, business loans are hard to qualify for if your business is in trouble. Lenders will often require that a business has been in operation for several years, have over $100,000 in revenue (or more, for some lenders), and often will require a personal guarantee from the owner (you) in the form of a home or some other collateral.
A lump sum payment from selling your structured settlement is money that you get to keep – no collateral guarantee required! It never needs to be paid back and you won’t be charged interest.
Payday Loans – Don’t Do It!
No. Never. It’s not a good idea.
If you recall your high school Shakespeare, you may remember a certain character from The Merchant of Venice named Shylock. In exchange for lending money to the story’s desperate hero, Shylock demanded a pound of flesh – literally. If the loan wasn’t repaid, Shylock wanted the debtor’s life.
Granted, modern-day payday loans aren’t that bad, but they aren’t much better.
The average interest rate on a payday loan is a staggering 300% – and that’s assuming the loan is repaid in two weeks (most aren’t). If you can’t pay back the loan in this unreasonable timeframe, your interest rate can soar to as high as 500% or more. One unfortunate couple ended up paying over $50,000 in interest on a $2,500 loan. Payday loans can very literally ruin lives.
A much better option is to sell your structured settlement payments. It’s your money, so the lump sum payment you receive never has to be paid back and you definitely won’t get stuck with any sky-high interest payments.
When you’re in need of money, a payday loan can look like an attractive option – but only in the short term. Interest and principal repayments can take years and seriously damage your financial standing in the long-term.
The Dangers of Cash Advances on Credit Cards
When you need money fast, there’s really no quicker option than borrowing off of your credit card; however, the long-term repercussions of taking cash advances can be staggering.
You should avoid taking out cash advances on your credit card for the following reasons:
• Cash advances are charged at higher interest rates than other activities such as purchases or balance transfers; this means that it will take you longer to pay off your cash advance than it would an ordinary purchase, like a sofa.
• In addition to higher interest rates, you’ll also be charged a cash advance fee, which can either be a fixed rate or a percentage of the amount you take out.
• Keep adding on the fees – along with the fees listed above, don’t forget about the ATM charge for taking the money out.
• Generally, credit cards do not offer grace periods for cash advances, which means you start accumulating interest the second you take the money out.
Get Money the Smart Way: Sell Your Structured Settlements
When you need money, a better option is to sell your structured settlement. The money is yours to keep, tax-free, and you don’t have to sacrifice your financial future with high interest rates or principal repayments.
RSL Funding beats out the bigger players in the industry by offering the Most Cash for your payments. In fact, RSL offered $7,000 more on average than J.G. Wentworth in 2018.*
Connect with an RSL Account Executive today to learn more about how selling your structured settlements can get you the money you need without causing more financial damage.
†J.G. Wentworth claim: Based on an analysis of competitive lump sum offers reported by potential customers during 2018, RSL Funding offered customers lump sums that were over $7,000.00 greater on average than offered by J.G. Wentworth in exchange for the same structured settlement, annuity, or lottery payments.