Repaying Credit Card Consolidation Loans: 2021 Review
Payoff provides a fixed rate to borrowers only for the purpose of paying off credit card debt. Its consolidation loans consolidate multiple high interest credit card payments into one monthly payment with a lower annual percentage rate.
Payoff helps borrowers focus on building credit through the loan by reporting payments to the three major credit bureaus and offering free monthly FICO score updates.
Free monthly credit score: Payoff lets borrowers see their FICO credit score for free every month, so you can track your progress as you make payments.
Direct payment to creditors: While borrowers can have the loan funds deposited into their personal checking account, the lender will also pay off your credit cards directly and offer a rate discount of between 0.25 and 1 percentage point. This means that you don’t have to send the funds yourself, which simplifies the consolidation process.
Soft credit draw: Borrowers can go to Payoff’s website and pre-qualify – check potential rates and terms before committing to a loan – without affecting their credit score. The payment then makes a hard draw on the credit, which can cause a temporary drop in the credit rating if the loan offer is accepted.
Scientific evaluations: Payoff is owned by Happy Money, a company that combines financial services with psychological counseling. Payoff members have access to Scientific Personality and Stress Assessments, as well as an overview of their cash flow (how much money is left after paying expenses). Payoff’s focus on helping consumers better understand their financial well-being is unique among lenders.
Non-members can also sign up for a free six-week Peace email series, which helps subscribers deal with financial stress.
Moderate financing time: If same day or next day financing for a debt consolidation loan is a priority, there are other lenders to consider. However, Payoff’s two-day fundraising timeline is still decent compared to some competitors.
May charge origination fees: Payoff may charge an origination fee of up to 5%. These fees are taken from the total loan amount at the time of loan issuance. Although these are the only repayment costs, some lenders do not charge any fees, including the origination fee.
No rate reduction for automatic payment: Unlike other lenders, Payoff does not offer a rate reduction for setting up automatic payments. This discount typically ranges from 0.25 to 0.5 percentage points and can lower the overall cost of your loan.
No co-signed, joint or guaranteed loan option: Payoff only offers unsecured debt consolidation loans, which means borrowers do not have the option of jointly submitting a joint application, adding a co-signer, or securing the loan with a collateral for better benefit. rate or a larger loan.
Sample loan: A loan of $ 20,000 over three years with an APR of 20.5% would cost $ 748 in monthly payments. You would pay $ 6,928 in total interest on this loan.
NerdWallet recommends comparing loans to find the best rate for you. Click the button below to pre-qualify on NerdWallet. You can receive personalized rates from several lenders who partner with us, including Payoff. Prequalification will not impact your credit.
You can complete an application on the Payoff website. After entering some personal information, you will be presented with loan options that you pre-qualify for. Checking your rates does not affect your credit score.