An unsecured personal loan from Payoff can help you consolidate credit card debt while simultaneously improving your credit score. That doesn’t sound like a bad deal, does it?
But before you start typing out your loan application, find out more details about Payoff’s loan terms and what their basic qualification standards are like.
You can also discover some unique features that set this lender apart from its competition. We’ll give you all the details you need to know to find out if Payoff is the right fit.
Payoff Personal Loans
Payoff loans are used for one purpose only: it allows you to consolidate several credit cards with high-interest payments into a single installment loan with fixed monthly payments.
Ideally, you’ll qualify for an interest rate that is lower than that of your credit cards. All borrowers must pay an origination fee of 2% to 5%, which is included in Payoff’s APR range of 8% to 25%. You can apply for a loan anywhere between $5,000 and $35,000 with payments lasting between two and five years.
Considering the average credit card APR is currently around 16.67%, you can save serious money with a Payoff loan. Of course, if you need a personal loan for reasons other than debt consolidation, then you’ll need to look elsewhere. Otherwise, Payoff could be a good fit for you.
In fact, not only could you lower your monthly payment amount, you also have the potential to raise your credit score. A recent study found that Payoff members who used their loan funds to pay off at least $5,000 in credit card debt saw 40 point jump within four months.
Payoff does not currently offer loans in the following states:
Alabama, Arizona, Connecticut, Delaware, Iowa, Kansas, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Mississippi, North Carolina, Nebraska, New Hampshire, Nevada, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Virginia, Vermont, Washington, Wisconsin, or West Virginia.
Payoff sets clear standards for its application requirements so you know whether or not you’re likely to be approved. To start, you’ll need a minimum FICO score of 660, which falls within the “fair” credit category. Your debt to income ratio should be no more than 50% and you’ll need at least three years of good credit.
On top of that, Payoff expects you to have at least two lines of credit that are open and satisfactory. However, only one can be an installment loan within the last year.
You may not have any current delinquencies and none from the last 12 months must be under 90 days. These standards help assure Payoff that you have a trustworthy credit history and are likely to repay your loan. Unlike many other lenders, there’s no set income requirement.
Before you fill out an in-depth application with Payoff, you can check your rate with no strings attached. You don’t have to pay anything and your credit score won’t be affected since it’s just a soft pull performed.
When you’re pre-approved, you may receive more than one offer. You can review the loan terms and rates and choose the one you prefer. From there, you move on to the complete application.
You’ll fill out some more information and verify everything you’ve submitted so far. At this point, Payoff will likely perform a hard pull on your credit report, which will be listed as an inquiry for two years.
Next, you just need to eSign your loan documents and get ready to receive your loan funds from Payoff. It’s a simple process that can be done completely from your laptop, tablet, or even your smartphone.
Once You’re Approved
Your funds from Payoff are deposited directly into your bank account so you can pay off your credit card debt. You also get to start taking advantage of some unique member benefits.
One of Payoff’s perks for borrowers is that you get your FICO credit score delivered each and every month. That way, you can track exactly what’s happening to your credit as you replace multiple revolving lines of credit with a single installment loan from Payoff.
As you’ll recall, it’s possible to see a double-digit jump within just the first few months of paying off your cards. Once your Payoff loan is approved, you also receive a welcome call with a member advocate, plus quarterly check-ins to make sure you’re on target to pay off your loan as scheduled.
In addition to the member benefits we discussed above, Payoff goes above and beyond most traditional lenders by offering job loss support. If you lose your job for whatever reason, you can just call them and they’ll work out a plan for you until you get back on your feet.
Payoff also invests in what they call “empowerment science.” These resources help members figure out their relationship with money through scientific assessments on personality, stress, and cash flow. They’ve performed a lot of interesting research, including a study linking debt to PTSD-like symptoms.
Payoff was founded eight years ago and is located in Costa Mesa, CA. In 2015, Payoff became the first online lender to offer its borrowers free credit scores. Its business places a large focus on science and psychology, and Payoff’s chief scientist actually used to head up a similar department at eHarmony.
Not surprisingly, the lender’s board of directors is full of corporate heavyweights, including Ariana Huffington (founder of the Huffington Post) and Joe Saunders (former CEO of Visa). That’s certainly not a bad team to have in your corner.
Should you consolidate your credit card debt?
No matter how much or how little credit card debt you have, it’s good to check in with your finances every quarter to make sure you’re satisfied with your current repayment plan.
If you don’t need to check in regularly because you’re already struggling to meet your payments every month, you’re definitely ready to explore other options. Consider the following scenarios as you decide on the best path out of debt.
When to Consolidate Your Credit Card Debt
Consolidating your credit card debt can be helpful in any number of scenarios. If you’re overburdened with multiple payments each month, particularly if they come with high interest rates, you should find out how an installment loan can help.
In many cases, particularly with a Payoff loan, you may be able to save on your monthly payments. Even if your payment is higher than your monthly minimum, you can very well save a substantial amount of money on interest. Use a credit card payoff calculator to compare the long-term costs.
It may be better to simply rip off the Bandaid now by making higher monthly payments, compared to making smaller minimum payments that cost more over time. Even if your current credit card debt is small, consolidating can be beneficial.
Do you pay attention to those notices in the mail from your credit card company? Even if you started off with a low APR, that may creep up every few months. If you haven’t checked recently, you may be surprised to find out that the interest you’re paying is much higher than expected!
Depending on the costs involved and your credit qualifications, you could either transfer those high-interest balances to a card with a low introductory rate or get a personal loan.
While you may be tempted by a zero or low interest credit card, be sure to pay attention to the fine print. Oftentimes, if you don’t pay off the entire balance during the introductory period, your rate will automatically skyrocket. You may also have to pay an annual fee just for having the card.
Other Considerations During Credit Card Debt Consolidation
When comparing your debt consolidation options, you have to look at two main factors: the total APR and the term length. It can actually be difficult to compare APRs of credit cards and personal loans aimed at debt consolidation.
Even if the card’s APR looks lower, it doesn’t have a set period to get you out of debt — you simply revolve your balance as you pay and spend.
With an installment loan, on the other hand, that APR applies to a fixed term. Depending on your loan agreement, you know you’re going to walk away debt free in a few years as long as you hold up your end of the bargain.
This is an important consideration as you weigh the holistic costs of each debt consolidation option. If you’re still unsure, it may be worth talking to a credit counselor or even an accountant to help you figure out your next move.
While Payoff doesn’t offer a huge amount of variation in its product offerings, it instead does one thing and does it well: debt consolidation.
As long as you meet the qualification requirements and find better rates, you’ll be working with a reputable lender that believes in the link between financial well-being and total well-being. Can you really ask for more than that?