Selling a structured settlement is one of the best choices for people who need a lump sum amount, particularly when they need to clear their debts or an unexpected expense comes up. Generally, people go to structured settlement companies to do so, but you must calculate the value of your structured settlement before you sell it.
Calculating the Value of a Structured Settlement
The value of the settlement depends on its present value. With time, the dollar cost increases, which is why it’s important to take the inflation rate into account. In addition, you need to consider the time value of money for determining the value. If you contact a factoring company, they will take several factors into account to accurately quote you on the value of your structured settlement.
Present Value
The factoring companies and structured settlement companies calculate the present value by using a formula that calculates the payments’ future value and minimizes the growth potential. It helps them calculate the discount rate, which is the percentage these companies charge to account for risks associated with the money they will receive somewhere in the future. Usually, the discount rate is 9% to 18%.
Number of Payments
It doesn’t matter if you choose We Pay More Funding LLC or another settlement company. They will consider the number of payments you are selling, along with the payment dates, economic conditions, and current market value. In addition, they calculate the service fees that come with transactions. In simpler words, only a settlement company will be able to provide an exact estimate of your structured settlement’s value.
