Knowing whether taking out a structured settlement loan is a good idea or not can be difficult after being awarded a settlement. Perhaps you need money before the structured settlement commences or maybe you just don’t want to wait for each payment to come. Whatever the case is, there are certain times where you should get the lump sum amount and when it may not be in your best interest. Below are two reasons why it might be a good idea and one reason it isn’t.

Why It May Be a Good Idea:

Reason 1: You have to pay for something immediately and need the money now.

Not everyone can wait until the court starts the settlement to deal with immediate bills and other financial problems. You’ll likely lose money in the long run, but if you need a large amount of money now, there are many top structured settlement firms willing to trade your structured settlement for a (slightly discounted) lump sum amount. Know, however, that even having a company buy your structured settlement will likely take some time.

Reason 2: You’re an elderly lottery winner and want the money now.

With the amount of time that some settlements take to receive, there’s no reason to wait an extended amount of time to receive your monetary award if you’re not going to have plenty of time to enjoy it. Taking a loan might be the best option.

Why It May Not Be a Good Idea:

Structured loans can be dangerous (you might get stuck paying more than you’re receiving) and are generally discouraged by state governments through tax legislation. In other words, there’s a risk in losing even more money through loan interest than you’re giving up to get the lump sum payment. That said, if you do opt for a loan, make sure that you know what you’re doing and have a very good reason for it.

Related: Structured Settlements, top structured settlements