Repaying Credit Card Consolidation Loans: 2021 Review

Payoff provides a fixed rate personal loans to borrowers for the sole 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.

Repayment is preferable for borrowers who:

  • You want to consolidate high interest credit card debt.

  • Have fair to good credit (above 629 FICO) and three years of credit history.

  • You want help building their credit scores.

Compensation at a glance

  • APRs are high among lenders targeting similar borrowers.

  • May charge origination fees.

  • No prepayment or late fees.

  • No rate reduction for automatic payments.

  • Perform a smooth credit check to pre-qualify.

  • Reports payments on time to three credit bureaus.

  • Discloses rates, fees and conditions on the website.

  • Offers an FAQ that answers key borrower questions.

  • Only offer unsecured loans.

  • Allows you to change the payment due date once every 12 months.

  • Finance loans within two days.

  • Offers direct payment to creditors for debt consolidation loans.

  • Not available in MA and NV.

  • Offers multiple customer contact channels and seven day support.

  • Fully online loan application and approval process.

  • Does not offer a mobile application to manage the loan.

Key terms to know about personal loans

The annual percentage rate is the interest rate on your loan plus all fees, calculated on an annual basis and expressed as a percentage. Use the APR to compare the loan costs of several lenders.

a original fee is a one-time upfront fee that some lenders charge for processing a loan. The fees can range from 1% to 10% of the loan amount, and lenders typically deduct them from your loan proceeds.

The debt to income ratio divides your total monthly debt payments by your gross monthly income, which gives you a percentage. Lenders use the DTI – along with credit history and other factors – to assess a borrower’s financial ability to repay a loan.

Lenders who offer prequalification usually do so using a soft credit check, which lets you see the rates and terms you qualify for without affecting your credit score. If you accept the loan offer, the lender will perform a verification to confirm your information. Physical checks lose a few points in your credit score.

Where Payoff stands out

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 effects a sharp drop in credit, which can cause a temporary drop in the credit rating, if the loan offer is accepted.

Scientific assessments: 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.

Where Payoff is insufficient

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 of the competition.

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 submitting a joint application, adding a co-signer, or securing the loan with a collateral for better benefit. rate or a larger loan.

How To Qualify For A Payoff Loan

  • Minimum credit score: 600; the average borrower is 710.

  • Minimum credit history: Three years.

  • At least two accounts opened on the credit report.

  • Minimum monthly free cash flow: $ 750; the average borrower is $ 2,000.

  • No debt-to-income ratio requirement, but average borrower is 40%.

  • Zero credit defaults.

  • Must be able to provide income verification.

  • No bankruptcy filed in the past two years.

  • Must provide a social security number.

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.

Pre-qualify on NerdWallet

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.

Apply on payment

You can complete an application on the Payoff website. After entering some personal information, you will be presented with loan options for which you are prequalified. Checking your rates does not affect your credit score.

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