The Difference Between Lump Sum and Annuity Payments


Selling a structured settlement

You and your coworkers decided to go in on a lottery pool. You never actually thought that you would be a winner. However, you soon learned that one of the tickets actually hit, and you are one of the lottery winners. You wonder how this will work. You turn in the lottery ticket, and you are given two options for payments. You can, one, choose to receive a lump sum payment, all of your funds at once. You can also, two, choose to receive monthly structured settlement payments. You decide to go with the second option, so that you are not tempted to spend your winnings all at once. There are a lot of things present when it comes to the difference between lump sum and annuity payments.

A few months later, you are looking into purchasing a home and you are surprised at the high interest charges on the mortgage rates. You will pay almost an additional mortgage over the life of the mortgage loan. You are told that if you make extra payments, you can greatly reduce the amount of interest you will pay. Although that sounds nice and ideal, how can you make extra monthly mortgage payments when you can barely keep up with your current bills?

The difference between lump sum and annuity payments is that you do not have the ability to request all of your money at once, once you have already agreed to receive structured payments. You can, however choose to sell your monthly payments to a company that will buy structured settlements.

The difference between lump sum and annuity payments is that lump sum money allows you to make more decisions as to how to spend your money. If you want to put more money down on your house to reduce interest charges, you can. If you want to purchase a vehicle in cash, to completely avoid high interest charges, you can do that too. When you receive cash for your settlement, you have all of these options.

There are other financial advantages to the difference between lump sum and annuity payments, as well. Many Americans carry a lot of debt on credit cards and in loans. In fact, the average U.S. household with debt carries $15,355 in credit card debt and $129,579 in total debt. The problem with high credit card debt is when the credit cards have high interest rates. If you are paying minimum monthly payments, you are likely not paying anything off of your debt. The average consumer has an average of 3.5 credit cards. Additionally, the average household is paying a total of $6,658 in interest per year.

Paying down things like high interest credit cards, high mortgages and auto loans can reduce the amount of money that is wasted on high interest rates. When you get cash for annuity now, you can make those decisions to reduce your interest rates.

Getting cash for settlement payments is a simple process. You simply receive cash in structured settlement payments through a private business. They will charge a small fee for purchasing your monthly structured payments. You will, in turn, receive the lump sum amount of money that allows you to make your own decisions with your money. The small fee charges are often worth the freedom to spend your money as you wish. Also, you will be saving money by avoiding high interest charges and paying for things in cash.

Most lottery winners are pushed and encouraged into structured settlement payments. However, this is not always the best option. This option does not give you the freedom to decide what you want to do with your own money. You are unable to make large purchases, such as cars and houses in full. Paying for something in full or putting more money down on it can save you thousands in high interest rate charges over many years.

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