Credit card debt in America is currently at a record high.
The average American carries a credit card balance of just above $6,000. For many people, these balances keep accruing due to high interest rates.
One way to navigate credit card debt involves consolidating it. Taking out a personal loan to pay off existing debt can keep your credit score in line. It can also mean lower interest rates, as you will only have one loan payment to make per month.
If you are thinking about credit card debt consolidation, take some time to choose the appropriate lender.
In this post, we’ll look closely at one lender you may come across in your research: Payoff. Payoff is an online lender of personal loans designed to help customers consolidate credit card debt effectively.
Read on for insight into this lender so that you can make a confident lender decision.
The Basics: Payoff Lender Review
Payoff is an online lender that gives loans to qualifying borrowers who wish to consolidate existing credit card debt. It does not provide any other loans with any other purposes beyond credit card debt consolidation.
According to its website, Payoff has been assisting customers with their journey towards “financial wellness” since 2009. While the lender is based in California, it receives applications and transfers funds solely online.
Because Payoff only offers loans designed to pay off credit card debt, its terms are fairly straightforward. The same goes for its website, which gives clear, simple information to prospective borrowers about the borrowing process.
Applicants can request between $5,000 and $35,000 in order to pay off existing debt. They can do so entirely online via Payoff’s digital application process, which allegedly takes only 3-5 minutes.
Prospective Payoff borrowers get to choose their loan payoff period, which must fall between 2 to 5 years. Rates will depend on the length of this payoff period as well as applicants’ financial history.
However, rates are fixed for any Payoff loan, hovering between 5.94% (8% APR) and 22.60% (25% APR).
Managing Payoff Funds
Borrowers receive their funds within seven business days of requesting a loan from Payoff and paying an origination fee of between 2% and 5%.
Besides this origination fee, Payoff borrowers won’t have to pay any other fees, including prepayment fees.
Once they have received funds, borrowers select monthly payment due dates. They can defer payments if they wish with no penalty. In fact, if you need to defer payments, you can consult a Payoff representative to modify your payoff plan according to your financial needs.
Payoff Loan Eligibility
Payoff does have eligibility requirements for requesting a loan. All applicants must have a minimum credit score of 640. They also must have a debt-to-income ratio of 50%. This means that you owe less than you make every month.
Payoff borrowers also have to prove at least three years of solid credit history.
You don’t have to show proof to Payoff that you are using its funds to consolidate credit card debt. However, Payoff provides borrowers with tools and resources that give pointers about credit card debt consolidation and management.
There are a few benefits to taking out a personal loan from Payoff for debt consolidation purposes. Let’s walk through these now.
1. High Borrowing Potential
Prospective Payoff borrowers can request as much as $35,000 from this lender. This is crucial, especially for individuals who face overwhelming amounts of credit card debt.
Many other online lenders provide personal loans of much smaller designations, particularly those that specialize in payday loans or same day loans. For this reason, Payoff is a viable option for individuals with significant credit card debt looking for quick consolidation.
2. No Fees (Besides Origination)
While Payoff does require all applicants to pay an origination fee once they’ve been approved for a loan, borrowers don’t have to pay any other fees.
Some online lenders charge fees for early repayment of loans, for example, or late fees for missed payments.
This can be beneficial for most borrowers, especially those who are already paying higher interest rates on their loans. Payoff’s emphasis on transparency also means that borrowers won’t be surprised with hidden fees once they’ve received their loan funds.
3. Streamlined Application Process
If you are keen to take out a Payoff loan, you can request funds in a matter of minutes online. Payoff’s application process is streamlined, and borrowers can receive funds within seven business days.
While applicants may have to upload a few essential documents to ensure eligibility, they don’t have to provide excessive information for approval. Payoff also gives applicants decisions on loans within hours.
Payoff loan applications also don’t have to worry about hard credit checks. Hard credit checks impact your credit score, while soft credit checks do not. All prospective Payoff borrowers experience a soft credit check only.
This is essential for borrowers who already have compromised or lower credit histories to begin with.
As a lender, Payoff is transparent and simple with its terms and application process. Its website itself is easy to navigate and very clear to read.
This can be valuable for prospective borrowers who are already overwhelmed by their options for credit card consolidation. Streamlined financing can make the entire process of consolidation far easier and hassle-free.
What’s more, Payoff has been in the lending business for nearly a decade. It operates online but has a brick-and-mortar office and a human staff, which is important when it comes to avoiding online lending scams.
While Payoff loans are advantageous for some borrowers, they may not be so ideal for others. Here’s a close look at the disadvantages of a Payoff loan.
1. Loan Origination Fees
Payoff does charge an origination fee for any of its loans, no matter what amount is requested. This fee ranges between 2% and 5%, depending on the loan payoff period selected.
This can be quite significant, especially for higher-value loans. A $35,000 loan requested through Payoff with a payoff period of 5 years would face an origination fee of $1,750.
Some borrowers may simply not have the means to pay this origination fee. It is also possible to find lenders that do not charge origination fees for personal loans.
2. Shorter Loan Payoff Periods
Payoff permits borrowers to pay off their loans within a period of 2-5 years. What’s more, interest rates increase the longer the term.
For borrowers of higher-value loans, this may be quite restrictive. It could also involve steep monthly payments.
It is possible to secure a loan through a lender with more generous payoff periods and terms, especially if you are keen to request a large sum and don’t want to face prohibitive interest rates.
3. Higher Rates
Payoff’s rates begin at 8% APR, which is relatively high given the standards of the industry. These rates are also variable, meaning that they depend on your credit history, amount of loan, and length of loan payoff period.
Borrowers could feasibly take out a $20,000 loan through Payoff and be subject to an 18% APR, for example.
When combined with a high origination fee, these rates can mean that Payoff borrowers pay significantly more in the long run. This simply may not be worth it, no matter how steep your credit card balances are.
4. Strict Eligibility Requirements
Payoff does have some eligibility requirements for prospective borrowers. To be approved for a Payoff loan, you have to have a minimum credit score of 640, a debt-to-income ratio of 50%, and three years of solid credit history.
You also have to prove that you haven’t been delinquent on any accounts. What’s more, Payoff borrowers can’t have taken out any installment loans in the last year.
They also require two open and satisfactory trades. This means that you have to have at least two lines of credit (i.e., credit cards) on which you make responsible payments.
Lastly, Payoff borrowers have to reside in specific states to be approved for a loan. Right now, Payoff does not serve customers living in MA, MS, NE, NV, OH, and WV.
Individuals with poor credit, limited credit history, and past delinquency on accounts will not be eligible for Payoff loans.
The Verdict: Payoff Lender Review
Payoff is an online provider of personal loans designed to help borrowers pay off their credit card debt. Borrowers can use a Payoff loan to eliminate credit card balances and simplify debt payments.
While Payoff does not force borrowers to use its funds for debt consolidation purposes, it gives its customers specific advice about managing credit card debt and finances.
So what’s the verdict of our Payoff lender review?
All in all, Payoff can be a viable option for qualified individuals who are interested in effectively managing their credit card debt. Payoff may be ideal for people who appreciate a simplified borrowing process and straightforward terms.
However, Payoff personal loans are subject to strict requirements. Borrowers don’t have much to choose from when it comes to payoff periods. A decent to excellent credit score is also required to secure a good rate with Payoff.
Payoff borrowers don’t have to pay any fees after they’ve received loan funds, but they do have to pay an origination fee that can be quite steep, depending on how much they request. This can be prohibitive for borrowers who don’t have sufficient funds to cover this fee up-front.
Payoff is just one of many online lenders available to consumers who find themselves in a financial pinch.
For this reason, we recommend that all prospective borrowers take the time to shop lenders and compare rates and terms. If you want help with this process, we can help here at Bonsai Finance.
Learn more about Bonsai Finance installment loans here!