Payoff loans review for borrowers with high-rate credit cards and debt consolidation
Personal loan sites continue to evolve and add extra benefits for borrowers. I remember using online loans in 2009 and not getting half the services today’s websites offer.
Payoff is one of the newer installment loan sites out there but has launched with some strong services and is one of the most transparent applications I’ve ever seen. You’ll know exactly what you need to get approved for a loan before you apply.
I haven’t tried Payoff yet for a loan so wanted to reach out to some borrowers as well as people within the company for this Payoff review.
What I found was a specialized site for paying off those high-rate credit cards and some extra services that put the website at the top of any list for personal loans.
Pros of Using Payoff Loans
- Low origination fee for shorter-term loans
- Lower rates compared to other personal loan sites
- Member Advocates to help keep you on track
- No late fees or other hidden fees
Cons of Using Payoff Loans
- Loan is specifically for debt consolidation
- Payoff may make a counter-offer to lower your loan amount
What is a Payoff Loan?
At first glance, there’s little to separate Payoff from other p2p or personal loan sites. The website offers loans from $5,000 to $35,000 with an average loan of $18K according to the site.
Looking closer at the site, you start to see what makes this installment loan company different.
Loans are made exclusively to pay off high-rate credit cards for debt consolidation. Now the site doesn’t check to make sure you use the money this way and it is a personal loan so technically you can use it for whatever purpose you wish.
The reason why Payoff tries to limit to only loans for credit card consolidation is in its mission, helping you get out from under high-rate debt and back on your feet.
Rates on loans are lower than I’ve seen on most personal loan sites, even the ones that require a higher credit score. I think part of this is that fact that loans are used to pay off credit card balances.
If this means borrowers are defaulting on fewer loans, because they’re really getting their financial lives on track, then it would make sense that the website can offer lower rates.
Payoff also offers ‘Member Advocates’ which are something like customer service and financial advisors that provide ongoing support on how to keep your finances on track. The advocates help you work through some of the tools on the website as well as help you with late payments or job security.
Check your rate on a loan to pay off your credit cards – won’t hurt your credit score
Payoff Reviews BBB
The BBB website lists 10 customer reviews for Payoff, three of which are five stars. Reading through the negative reviews is helpful to a point but having more negative reviews is typical for an online loan site. Only unhappy people tend to take the time to leave a review.
Reading the reviews can be helpful if you see that a site is getting negative feedback constantly for the same thing. That means it could be a real problem and not just disgruntled people that got denied for a loan.
One of the biggest complaints for Payoff on BBB is from people that got denied for a loan. This should have been obvious from their credit score and other requirements, but people don’t take the time to read loan requirements before applying.
Payoff is one of the most up-front personal loan sites I’ve seen about what it requires for approval. You’ll pretty much know if you can get a loan before you apply.
Another Payoff complaint on BBB is the counter-offers sometimes made by customer service. For example, if you apply for a $35,000 loan but only have $10,000 in credit card debt, customer service is going to call you and recommend you only borrow up to $15,000 or less.
Payoff isn’t like other installment loan websites that will loan you as much as possible and really don’t care what you do with it. Payoff wants you to pay off those credit cards and get your debt under control. If you’re just looking to borrow money to go shopping, Payoff isn’t for you.
Payoff Loan Requirements
Payoff reviews all loan applications, but it makes a point of telling you exactly what you need to get approved. This is a huge step up from most personal loan sites by providing no guidance on loan requirements.
To get a loan from Payoff, you’ll generally need:
- Credit score of 640 or higher
- No more than half your income going to pay off debt (50% DTI)
- Three years of credit history
- No more than one installment loan or personal loan in last 12 months
- No current delinquencies and none greater than 90 days in last 12 months
Payoff loan requirements aren’t something that will disqualify very many people but it’s nice seeing exactly what you need. The site will still lend to bad credit borrowers, just not to people that have multiple bad marks on their credit report.
Payoff loans are not available in Massachusetts, Mississippi, Nebraska, Nevada, Ohio or West Virginia. If you live in one of these states, the next best alternative I recommend is PersonalLoans.com for loans.
Payoff Loan Fees
Payoff is completely transparent in loan fees, rates and what you need as a borrower. The relatively well-defined requirements for loans means the rates are some of the most competitive I’ve seen.
Payoff rates top out around 25% versus most other p2p sites and online lenders that go as high as 36% and payday loans that exceed 500% on an annual rate.
I also like that Payoff charges a lower origination fee for shorter-term loans, as low as 2% versus the standard 5% loan fee charged on most sites. Even if you’re planning on borrowing for three- or five-years, you might consider a shorter-term loan for the lower fee and then just refinance the loan early.
Payoff charges absolutely no hidden fees, not even a late fee. Borrowers pay no application fee, prepayment penalty, processing or returned check fee or annual fees.
Apply for a loan up to $35,000 from Payoff – instant approval
Applying for a Payoff Loan
Applying for a Payoff loan is identical to any other personal loan website. You’ll need your date of birth, social security number and employment information to create an account.
Payoff will then do a soft-pull of your credit to pre-approve your loan and estimate a rate. None of this affects your credit score and you’ll get your loan terms before having to accept the loan.
The website might come back with a counter-offer, recommending that you borrow less than the requested amount. Payoff doesn’t require that you use loan proceeds to only pay off credit cards but it generally frowns on borrowing way more than your credit card debt.
Money can be deposited in your bank account in as little as one business day but it might take longer if your case requires verification. Monthly payments on the loan are fixed and you have the option to defer or skip a payment if you run into trouble. Your Member Advocate will help design a repayment plan that fits your budget.
You’ll also get access to see your FICO score for free on a monthly basis. This is a nice extra benefit Payoff offers and will help you track how much your credit score has increased. Payoff borrowers report an average increase of 40 points in their FICO score after paying off their loan.
Competition for online loans looks like it’s forcing lenders to offer more benefits and services. Payoff is definitely proof of this with it’s additional services like a Member Advocate and transparency in loan requirements. I like that the site limits borrowing to paying off credit cards and it’s absolutely one you should consider for debt consolidation.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.