There are really two forms of personal loans, and lump sum versus payments is one other choice that some people have. Both of these are great options for many people who are in need of a quick influx of cash. However, when you get a lump sum payment or a group of payments, there’s an extra element of risk because the amount may be smaller than what was estimated. Here are a few things to look for when comparing lump sum versus payments.

First of all, when you’re comparing lump sum versus payments you should remember that it can be difficult to get approval for a large lump sum payment. Lenders and private investors are very leery of these loans because of the inherent risks. As such, you’ll typically have to put up your house or other collateral against the loan, and sometimes this isn’t a very comforting option for the lender. This is why it’s important to find a lender who will let you know upfront that they will only offer a stipulated finding.

If you are going with a lump sum versus payments, you should understand that the interest rate on this loan is typically quite low. In fact, in some cases the interest rate can be as low as 4%, which is quite attractive. Of course, if you are nearing retirement age or you haven’t saved much for retirement, then this interest rate may not be enough to help you make ends meet. In this case, it’s really a matter of finding a better way to pay your bills.

The best thing about lump sum versus payments are that you can calculate your future value with ease. If you know your future value then you’ll know what it is that you are putting down on the capital budgeting tool. Your future value will be the amount of money that you could potentially get if you were to invest that money today in an annuity or some other form of capital structure. The good news is that you can use your future value to determine whether or not you should be putting money away in the first place.

Of course, lump sum versus payments also come down to one simple concept. Which would you rather do with your money? You’ll often hear people saying that you should take the lump sum and live comfortably, or you can take the payments and use that money to start investing for your retirement. The truth of the matter is that this isn’t necessarily a choice that you’re going to be able to make without making some kind of sacrifice in the short-term. However, over the long-term you will definitely see a great return on your investment. In fact, you may even find that you’ll be able to completely eliminate your financial worries by doing just this.

Hopefully this short article has given you a few things to think about when it comes to deciding between a lump sum and payments. For more information you can always talk to a financial advisor or even do some research online. Just remember that there are many advantages to either option and just as many disadvantages. So, weigh your options carefully and make your decision based on your current financial situation, as well as what’s best for your long-term financial goals. Good luck!