Key Differences between an Inheritance Cash Advance payment and a loan

Payment Structure / Repayment Structure

Inheritance Cash Advance 

A lump sum payment is made to an heir following the acceptance of the bid from the buyer via contract.  The lump sum payment is not dependent on the probate closure.  The buyer takes on the risk of any probate complications and delays. The buyer is paid directly from the estate when probate closes. No repayments are made by the heir or beneficiaries.

Loan 

Traditional loans require regular repayments, typically on a monthly basis. These repayments include both principal and interest, and failing to make timely payments can result in penalties or damage to your credit score.

Basis of Approval

Inheritance Cash Advance

An inheritance cash advance is not based on an approval process.  The Panoptic Inheritance Exchange confirms the validity of the inheritance. Once this is validated, the inheritance bid becomes active on the Panoptic Inheritance Exchange.  The bid is secured against the expected inheritance, so the focus is on the estate’s assets not the beneficiary's credit history or ability to repay.

Loan

Loans are granted based on the borrower’s creditworthiness, income, and ability to repay. Credit scores, debt-to-income ratios, and financial stability are key factors in the approval process.

Interest and Fees

Inheritance Advance

There is no interest against an inheritance advance payment.  It is not a loan. A transaction fee is paid to the Panoptic Inheritance Exchange upon payment between heir and buyer. This fee is not structured like traditional loan interest but rather is a one-off percentage of the payment amount.

Loan

Traditional loans involve interest rates that can be fixed or variable and these rates are applied to the principal amount over the term of the loan. The total cost of the loan is determined by the interest rate and the length of the repayment term.

Impact on Credit

Inheritance Advance

Since an inheritance advance is secured by the future inheritance, it does not impact your credit score. 

Loan

Loans impact your credit score. Timely payments can positively affect your credit, while missed or late payments can harm your credit rating.

Purpose and Use

Inheritance Advance

The advance is designed to provide beneficiaries with immediate access to funds from their expected inheritance. It is not intended for ongoing financial needs but rather as a bridge to cover urgent expenses or financial goals.

Loan

Loans can be used for various purposes, including major purchases, debt consolidation, or personal expenses. They are generally intended to provide long-term financial solutions rather than immediate, short-term access to funds.

Probate advance payments can be a valuable option for accessing funds quickly. It is essential to weigh the benefits against the potential impact on your financial circumstance and explore all available options. 

Alternatives to Consider

Before opting for an inheritance advance payment, consider these alternatives:

Personal Loans

Depending on your financial situation, a personal loan from a bank or credit union might offer better terms.

Family and Friends

If possible, borrowing from family or friends could be a less expensive option.

Budgeting and Planning

 Careful budgeting and planning can help manage immediate financial needs without requiring an advance.

Understanding that an inheritance cash advance is not a loan helps clarify its unique nature and implications. An inheritance cash advance is a financial arrangement that provides early access to a portion of your inheritance, with repayment occurring after the estate is settled. It operates differently from traditional loans in terms of approval, repayment, and impact on credit.

If you’re considering an Inheritance Cash Advance payment, it’s essential to apply options to your needs, understand the terms, and explore other financial options that may be available. Consulting with a financial advisor or estate planner can also provide valuable insights and help ensure that you make the best decision for your financial future.