Specifically focused on helping individuals eliminate or dramatically reduce their credit card debt, Payoff offers personal debt consolidation loans.
Payoff’s personal loans are designed to help customers gain control over their finances before mounting debt greatly impacts their credit scores. Not everyone can qualify for these loans, but Payoff supports those who are approved to overcome their debt in a conscientious, long-term manner.
About the Company
Based in Costa Mesa, California, Payoff started in 2009 as less of a lending agency and more of a behavioral science experiment.
The founders partnered with researchers, clinical psychologists, data scientists, and neuroscientists to help customers change their mindsets in order to fundamentally change how they make financial decisions.
Customers, whom Payoff refers to as “members,” work one-on-one with Payoff’s “member advocates” to alleviate their debts and get their money to work for them.
Payoff is not a bank, but rather a financial wellness company that works with lending partners to originate loans ranging from $5,000 to $35,000 for those who qualify.
They offer extremely competitive rates, making Payoff’s loans an attractive option over many high-interest credit cards. To originate the loans, Payoff works with First Electronic Bank. This bank is insured by FDIC and based in Utah.
Along with debt consolidation options, Payoff offers members a wide variety of educational materials that support a path to financial freedom. Payoff’s blog is filled with useful tips and suggestions on personal finance, while the company’s “Happy Money” team has an interactive app built to change your perspective on money while increasing your happiness.
In this review, you’ll learn:
- What kinds of loans Payoff offers
- The amount of money you can borrow
- Details regarding terms, fees, and rates
- What types of borrowers qualify
- Customer support information
What types of loans does Payoff offer?
Payoff personal loans focus solely on helping their members reduce high-interest credit card debt. In the United States, credit card debt is mounting into the billions and continues to rise—especially for Millennials. Financial experts agree that credit card debt should be paid off before auto loans or mortgages, as this kind of debt can balloon quickly due to high-interest rates.
Individuals who are in need of debt consolidation loans but do not have credit card debt will not be approved by Payoff.
Payoff Loans: Terms and Rates
Payoff’s borrowers may choose a loan term length that works best for them. Options for term lengths range between two and five years. You have the opportunity to preview and agree to the loan’s terms before accepting the funds.
The rates for Payoff personal loans are potentially half of what many customers are paying on their credit card debt. APR ranges from 5.99% to 24.99%. This is determined by the individual’s creditworthiness along with other factors. Payoff’s APRs are fixed, not adjustable. This means your rate will stay the same throughout the life of the loan.
Unlike many lenders, Payoff is transparent with their fees. They charge an origination fee that equals between 0% and 5% of the total amount of the loan. However, the fee is only charged once and is not hidden within the repayment process. The only other fee they charge is a returned payment fee of $15 per payment.
They also do not charge many other common fees, specifically:
- Application fees
- Late fees
- Prepayment fees
- Check processing fees
- Annual fees
When applying online for Payoff personal loans, individuals are able to choose the loan amount as well. You can choose to borrow between $5,000 and $35,000, but a member advocate will contact you to discuss the requested amount.
Sometimes, the approved loan amount may be less than what you have requested. Payoff will make this determination based on their experience with your particular kind of debt.
Payoff Loan Requirements
Individuals interested in applying for a Payoff personal loan should first review the requirements and check for errors or other concerns in their credit history before they apply online.
With the low rates and personalized support offered by Payoff, the qualifications for approval are stringent but also quite transparent. The criteria considered are:
1. Good FICO score
Payoff uses TransUnion, which may differ from other credit bureaus, when determining credit scores. Qualifying borrowers must have a score of at least 640.
2. Annual income requirements
In order to receive a debt consolidation loan to pay off your credit cards, you must be able to demonstrate that your annual income is at least $25,000.
3. Long credit history
It does not take long to rack up credit card debt, but Payoff requires that you have at least three problem-free years on your credit report. You also must have two open lines of credit with payments you’ve made on time. This should include no more than one installment loan, including what are known as point-of-sale or “buy now, pay later” loans, taken out within the last year.
4. Credit card debt—but not delinquencies
Because the Payoff personal loan program is focused specifically on paying off credit card debt, credit card debt is a requirement for approval. If you plan to use the loan to consolidate other debt, such as student loans, auto loans or medical bills, you will have to seek another lender.
However, you should not have credit delinquencies on your credit report. If you have outstanding payments, you should resolve those issues before applying for Payoff personal loans.
5. A balanced debt-to-income ratio
Also known as a DTI ratio, a debt-to-income ratio is simply your monthly debt payments divided into the amount of money you bring in every month before taxes and deductions. To qualify for a Payoff loan, your debt-to-income ratio must be 50% or less. For example, if your combined debt payments are $500 each month, your monthly income must be at least $1,000.
Payoff Personal Loans Application Process
There is a four-part process for applying for a Payoff loan:
- Fill out the online application by providing your personal information, including whether you own a home and your annual income. A soft inquiry on your credit report is required, but your credit score will not be affected. The results of a soft inquiry simply allow you to check the rate offered for your loan.
- Create an account. Once you provide your email address and choose a password, you are able to determine your repayment terms. You can choose the length of the loan and how long you will need to pay the loan off. Look at your monthly household budget to see what you can realistically afford to pay toward the loan each month. At this point, you’ll receive an offer with an APR, terms, and a loan amount. The offer will be good for 30 days.
- If you are pleased with the offer, you can verify your information and sign the contract using an electronic signature tool. The formal approval process will include a hard inquiry on your credit report. Having too many hard inquiries on your credit report can impact your credit score.
- Receive your funds. Once everything is approved, the Payoff team will deposit your funds electronically into your bank account. It usually takes between two to seven days after being approved.
Payoff Repayment Process
Members are able to pay down their loans each month through a direct withdrawal from their bank account. However, if you wish to pay extra toward your loan, you will either have to pay exactly the same amount as your normal payment or switch to manually submitting each payment from your bank.
Payoff Customer Service Experience
Overall, customers report that Payoff’s application and approval process is extremely fast. If there are questions, member advocates are available from 7 a.m. to 6 p.m. PST Monday through Friday, as well as 8 a.m. to 5 p.m. PST on Saturdays. Members may also leave a message after hours for a response once the office reopens.
To contact a member advocate, the options include:
- By Phone: (800) 878-0901
- By Online Chat: www.payoff.com
- By Email: email@example.com
- By Mail: 3200 Park Center Drive Suite 800; Costa Mesa, CA 92626
Payoff additionally takes pride in having a much more robust customer experience beyond the initial approval process. As is evident by the fact that the company calls its customers “members,” they offer benefits to those that join them. The benefits include:
- A FICO score increase averaging 40 points for those who are able to eliminate $5,000 of credit card debt on their credit report
- Free FICO score updates on a monthly basis to track credit changes
- Help if a member loses a job
- Support from member advocates that includes welcome calls for new members as well as quarterly check-in calls during the first year
- Joy, an app that uses psychology and behavioral science to answer life and career questions in order to help change the way people think about money
One of the most unique benefits for those with Payoff personal loans is that there are no penalties for missing payments. You have the ability to work with a representative to either defer the payment, change the date the payment is due, or even skip the payment altogether.
Payoff understands that not everyone looking to eliminate their credit card debt can qualify for their program. If you apply but do not have a high enough credit score to be approved, Payoff will offer enrollment in a program called Lift.
Lift offers tips and tools to help people improve their credit scores, cut spending, and regain control of their finances over time. One tool available is a categorization of your spending habits based on your banking activities.
- Low APR
- Individualized customer service
- Transparent fee structure
- Missed payment forgiveness options
- Strict requirements to qualify
- Can only be used to pay off credit card debt
For those who qualify and are committed to improving their financial health over the long run, Payroll personal loans can offer a solution to eliminating or greatly reducing credit card debt.