Borrowize's Take: Payoff is a perfect loan if you're serious about becoming debt free
We recommend Payoff if your goal is to eliminate or consolidate your existing high interest loans or credit card debt. While their APRs are not the lowest in the industry, their loans are a still a smart and cost-effective alternative to expensive credit card debt.
Payoff also offers unique tools and proprietary financial education resources to help you manage your debt and develop the right habits to make smart financial decisions.
There are plenty of online lenders that claim to be different, but Payoff actually delivers. Payoff is committed to taking a consumer-advocacy approach to lending, starting with their aversion to further indebting borrowers, to their affordable loan APRs, to their flexible qualifying criteria and payment options, and finally to their Payoff® Life community.
Payoff Personal Loans at a Glance:
- Loan Amounts & APRs: Payoff offers loans of $5,000 - $35,000 with fixed APRs between 8.00% and 22.00% that charge equal monthly payments over a 2 to 5 year period.
- Loan Uses: Strictly for debt consolidation
- Fees & Fine Print: Payoff charges all borrowers an origination fee between 2.00% and 5.00%, which tends to be higher as the loan amount increases. For example, if you borrow $10,000 with a 5% origination fee you will only receive $9,500 but you will still be charged interest and have to repay the full amount of $10,000. Charging an origination fee is uncharacteristic for a lender that markets itself as a financial partner, particularly since there are other lenders such as SoFi and Lightstream that do not charge origination fees.
Payoff is a Good Fit For:
Payoff wants to help borrowers who have accumulated too much debt, yet have demonstrated an ability to make on-time payments. Payoff does not place a big emphasis on traditional FICO scores, though their average borrowers generally have credit scores of 660 or higher.
While this means they are more accommodating than some of the prime or near-prime lenders, Payoff does require that the borrowers have at least 3 years of credit history and less than a 50% debt-to-income ratio,
Payoff is NOT a good fit for borrowers with limited to no credit history, which may end up excluding millennial borrowers who are new to the workforce and are more likely to carry credit card and/or student debt. Additionally, Payoff will not approve borrowers with recent credit delinquencies, bankruptcies, or those that demonstrate a pattern of late or missed payments.
Payoff Company Snapshot: An Anti-Debt Lender... If There is Such a Thing
A lender that wants to eliminate debt sounds like a bit of an oxymoron, right? Payoff’s singular focus is to help its customers become debt-free sooner (hence the name Payoff). If you need money to go on vacation, pay for your wedding, or cover unforeseen expenses, you should apply elsewhere.
Payoff understands the tremendous long-term costs of being in a never-ending cycle of debt, which occurs when most of a borrower’s monthly payments go towards covering the interest while the principle owed barely decreases.
In 2016, the average American family carried $8,377 in credit debt at an average APR of 15.99%. Assuming they only make the minimum monthly payment, each family will end up paying $10,434 in interest and take more than 24 years to pay it off.
That’s why Payoff does not issue any new debt. Any dollar you borrow from Payoff must be used to pay a dollar of existing debt. In addition, their set loan terms mean that you will become debt free within two to five years as long as you make your monthly payments.
Payoff is Unique Because it is Invested in Your Financial Well-Being:
The Payoff Member Community offers borrowers unique perks such as free FICO score updates, job loss support, and “Member Advocates” that offer ongoing support and guidance on how to improve your financial outlook and achieve long-term financial goals.
If you miss a payment, a Payoff Member Advocate will work out a plan that may allow you to either defer, skip, or rescheduling your payment.
Payoff’s innovative model extends beyond its unwillingness to further indebt borrowers. In addition to lending industry veterans, Payoff’s founding group includes research and clinical psychologists, data scientists, neuroscientists, and technology experts. They offer financial literacy, financial personality quizzes, a user community, and other free resources to help change the way people spend, save, and think about money.
How to Apply for a Payoff Loan:
The Payoff application process is simple, highly transparent, and can be completed online in only a few minutes. If you’re undecided and want to first estimate your rate, you can do so by answering a few questions. Payoff conducts a soft-credit pull for rate estimates, which means that your credit score will not be impacted.
If you decide to move forward, the detailed application process, or a company representative if you prefer, will walk you through the loan options, contract information, and any additional information required to verify that you qualify for the loan. Funds are generally deposited directly into your bank account within 1 to 7 days, at which point you will be set up on their platform to manage your loan going forward.