Payoff review: A loan to pay off credit card debt

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In a Nutshell

Payoff personal loans are aimed at helping people pay off high-interest credit card debt. The company offers competitive rates with no prepayment fee. But you may be charged an origination fee upfront, and Payoff doesn’t offer direct payments for debt consolidation, so you’ll be responsible for paying off creditors with the funds on your own.

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Pros Cons
Soft credit inquiry to check rate estimate Not available in all states
Competitive interest rates Potential origination fee
No prepayment penalty No direct payments for debt consolidation

What you need to know about a Payoff personal loan

Payoff is an online lender that works with a network of partners to offer fixed-rate personal loans for credit card debt consolidation. Payoff offers repayment terms of two to five years and loan amounts of $5,000 to $40,000 (though the minimum loan amount may vary based on the state you live in).

Here’s what you need to know if you’re considering a loan from Payoff.

No direct payments for debt consolidation

Payoff loans are designed to help you consolidate high-interest credit card debt into a single monthly payment. If you’re approved for a debt-consolidation loan, Payoff won’t send payment directly to your creditors, unlike some competitors. So you’ll have to handle that yourself.

That might not be a big deal if you have your own plan for paying off your existing debts with loan proceeds. But if you think you might be tempted to use the money for something else, you may want to go with a lender that offers direct payments for debt consolidation.

Prequalification available

Payoff offers applications for prequalification, which can be completed online and won’t affect your credit scores. After you submit your application, you’ll see estimated loan terms that you might qualify for, including loan amount, interest rate and repayment term. Take note that these are just estimates and prequalification doesn’t mean that you’re actually qualified for a loan.

If you see an estimated offer that meets your needs and fits your budget, you must complete your application to see if you get final approval for the funds (and at what terms). Completing your application will result in a hard credit inquiry, which may lower your credit scores.

Competitive interest rates

While Payoff offers competitive interest rates, only applicants with the best credit are likely to receive the lowest rates offered.

To qualify for a Payoff loan, you need …

  • A minimum FICO® credit score of 640
  • No current delinquencies

Payoff may also consider your:

  • Age of credit history
  • Open tradelines (credit lines) showing on-time payments
  • Debt-to-income ratio
  • Credit utilization

Origination fee

Payoff doesn’t have many fees. But the lender may charge an origination fee on your loan when it’s issued. That means if you’re approved for a loan of say $20,000, with an origination fee of 4%, you’ll receive $19,200 instead of the full amount.

Still, Payoff doesn’t charge some of the fees that other lenders do, including application fees, prepayment penalties, late fees, returned check fees, annual fees or check-processing fees.

A closer look at Payoff personal loans

If you’re thinking about getting a personal loan from Payoff, here are a few additional details to consider.

  • Minimum age — You must be at least 18 years old to apply. You also must have a valid Social Security number and checking account.
  • Not available in all states — Payoff loans aren’t available in Massachusetts, Mississippi, Nebraska, Nevada or West Virginia.
  • No joint applicants or co-signers — Payoff doesn’t accept joint applications, so your credit has to be good enough for you to qualify on your own.
  • Funding time — It typically takes Payoff three to seven business days to verify your application information. After you’ve been approved and you sign your loan documents, it takes about three to six business days for your loan funds to be deposited into your bank account.

Who a Payoff loan is good for

A Payoff personal loan may be a good option if you meet Payoff’s minimum eligibility requirements, want a debt-consolidation loan and don’t mind sending payment to each of your creditors individually. If you need a personal loan for a different purpose, or you want to submit a joint application, you may be better off with a different lender.

How to apply with Payoff

Payoff’s application process can be completed online. The first step is to apply for prequalification.

If you’re prequalified for a loan and want to move forward with an offer, you’ll be asked to finish your application and verify the information you provided, which may require you to submit a photo ID, pay stubs and bank statements.

If a Payoff personal loan isn’t right for you, consider this alternative

  • PNC Bank: This lender might be a good choice if you want to use your personal loan for something other than consolidating credit card debt.
  • Marcus by Goldman Sachs: A Marcus personal loan may be a good choice if you want direct payments for debt consolidation.

About the author: Jennifer Brozic is a freelance financial services writer with a bachelor’s degree in journalism from the University of Maryland and a master’s degree in communication management from Tow… Read more.