How to use the offer calculator
Enter only the payments you would actually sell (some sales cover part of each payment or a set number of years). Then enter the lump sum in the offer, after any fees the buyer deducts. The result is the yearly rate at which your payments are worth exactly that lump sum.
Run it for every offer you receive. Because each offer is converted to the same measure, you can compare them even when they cover different payments.
What is a discount rate on a structured settlement sale?
The discount rate is the yearly rate a buyer uses to turn your future payments into a lump sum today. A higher rate means a smaller lump sum for the same payments. Federal law defines the factoring discount as the total of the payments being bought minus what the payee is actually paid for them.
Under federal law, a buyer that acquires structured settlement payment rights without court approval in a qualified order owes a tax equal to 40 percent of that factoring discount. That is why sales go through a court, which must find the sale is in your best interest.
Questions to ask before you accept
Ask each buyer for the total of the payments, the lump sum, every fee, and the discount rate in writing; your state's protection act may require these disclosures. Ask whether you can sell only part of your payments. And consider alternatives, such as keeping the payments or selling fewer of them.