A benchmark for anyone considering selling future structured settlement payments for a lump sum — present value at a fair discount rate is what a factoring company’s offer should be compared against.
How it works
Each future payment is discounted back to today’s value using the same discounted-cash-flow math as this site’s NPV calculator, then summed. The result is meaningfully below the nominal total of all payments, since money received later is worth less today.
What this does not include
Actual factoring company offers are typically well below fair present value, since they build in their own profit margin — this calculator computes the benchmark to compare against, not what a specific buyer would actually offer.
How to use this calculator
- Enter the monthly payment amount and number of remaining payments.
- Enter a discount rate reflecting current market rates and risk.
Frequently asked questions
Why is present value so much lower than the nominal total?
Because money received in the future is worth less than money received today — a payment 10 years out is discounted much more heavily than one due next month.
What discount rate should I use?
A rate reflecting current risk-free rates plus some risk premium is common — a court reviewing a settlement sale often requires the calculation use a specific, disclosed rate.
Is selling structured settlement payments a good idea?
It depends entirely on the buyer’s offer relative to this present value benchmark, and on the seller’s actual need for a lump sum now versus steady future income — this calculator informs the comparison, not the decision itself.
