Inheritance money can be vital in helping you cover the costs of a loved one’s passing, especially if you have to pay funeral costs, taxes, or debts. Unfortunately, it can take time for inheritance money to be released, which may impact your day-to-day.
To reduce the impact as much as possible, it might be necessary to find alternative funding methods to tide you over. Of course, traditional loans can put your personal assets at risk, but there is one key way to avoid this.
Why you should avoid traditional loans for accessing inheritance
While waiting for an inheritance payout, you might be tempted to take a personal loan or credit card to pay off the inheritance tax and other costs. Typically, these are relatively straightforward ways to access additional funds, however, they do pose certain risks.
For instance, when you take out a personal loan, it has to be secured against your current assets. This usually includes your home, car, or another valuable asset. That way, if you are unable to repay your loan, then these items can be claimed instead.
Instead of putting your current assets at risk, you can take out an inheritance advance loan instead.
Understanding inheritance advance loans
An inheritance advance loan is a special type of loan that is secured against the future assets, rather than your current ones. This means that should you encounter repayment issues, all of your current assets are safe. Many people view an inheritance loan as a safer option, as it gives immediate access to additional funds without facing the risks of losing their vehicle or home.
It’s worth remembering that the way you repay inheritance loans differs, too. For example, instead of monthly repayments, you’re expected to repay the loan in a single lump sum once you gain access to the inheritance.
Applying for an inheritance loan
To apply for an inheritance loan, you’ll typically need to provide several documents, including proof of the expected inheritance and a legal will. While the specific requirements may vary, your chosen lender should make it clear exactly what they require ahead of time.
Another attractive aspect of an inheritance loan is that they usually take between 48 and 72 hours to process, compared to the 12 weeks of probate. By providing fast access to funds, it enables beneficiaries to cover various costs and expenses in the short term.
Weighing the risks and rewards of inheritance advances
As with anything, there are pros and cons to getting an inheritance loan. To help you weigh up the decision, we’ve broken down some main points below:
Pros
- Fast access to money
- No credit checks
- No monthly repayments
- No personal risk
Cons
- Won’t receive full inheritance
- Interest may increase if probate is delayed
It’s also worth noting that the administrators of your inheritance will also repay the loan on your behalf, before sending you the rest of your money. In short, it can be a very simple, painless process.