If you won the lottery, what would you do? You may not be aware of it but large lottery payouts are paid as annuities that amount to periodic payments spread over a period of time. These payments are so small and far between that many lottery winners don’t actually feel like they’ve really won anything.

Fortunately, there are companies in the business of purchasing lottery payments and providing winners a cash lump sum in exchange. You transfer the rights to the payment stream and then receive a lump sum at today’s cash value. With that being said, expect that the worth of your lottery winnings to be much less than the total of all combined payments. This is because the total winnings equal the total payments over the payment period. The Lottery just has to come up with a fraction of that amount, invest it at a percentage rate, and pay you the installments.

For instance, the Lottery may have to invest just $500,000 at 3% to pay you a total of $1,000,000 over 20 years. If you were presented the option to get a lump sum, you would receive the equivalent dollar value in today’s dollars of $500,000.

In essence, if you sell lottery payments today, it is the same thing as getting the cash value of the prize money today. There are a number of things to take into consideration once you’ve decided to sell lottery payments.

What to Consider When Selling Lottery Payments

First of all, selling lottery payments is a legal transaction that can take up to two and a half months to complete. Make sure you begin the process at a time that will ensure the receipt of the lump sum coincides with your needs.

There are a lot companies will be interested in purchasing your lottery winnings. Contact several of them before deciding on a buyer. Check all your prospects backgrounds to see if they are competent and trustworthy. This will help you avoid delays or even scams. Also ask them what discount rate they will be using. The higher the discount rate is, the lower your lump sum will be.

Lastly, be aware of all the fees involved. Fees charged can vary greatly from company to company. You need to look for who’s offering the best value for your lottery payments.