Payoff

The Good

• • Competitive APR rates as low as 8%
  • Interactive tools to help improve financial wellness
  • Transparent fee structure
  • Free credit score update each month

   

Payoff stands apart from its competition in terms of its overall financial wellness approach. In addition to offering a loan to its customers, the online company focuses on providing financial guidance to its customers, with online quizzes to understand customers’ financial habits. Payoff offers personalized recommendations to the borrowers, and in case of a default, instead of charging a late fee, its financial advisors help borrowers get out of the default.

Talking about its financial product, Payoff offers affordable fixed rate loans, with an APR between 8% to 25%. In a step to promote transparency, the company has listed its fee structure online, allowing customers to understand the fee up front. It sends a free credit score update with the monthly report, allowing customers to maintain their financial health.

Origination Fees

The origination fee helps a lender cover the costs of servicing a loan. Payoff write, “In an effort to be transparent, we don’t hide our origination fee bundled inside your loan. It’s the only fee associated with the Payoff® Loan and is charged only once, when your loan is issued.”

They then go on to show the following table:

In addition, Payoff does not charge prepayment fees, late fees, annual fees or non-sufficient funds fees.

The Bad

• Difficult to qualify if FICO score is less than 660
• Only in 19 states

For starters, Payoff has strict eligibility requirement, including a credit score of 660 or higher, a debt-to-income ratio of 50% or lower, and at least three years of good credit history. Further, if you have a current credit delinquency or any in the last 12 months that lasted over 90 days, you are automatically disqualified. In short, borrowers with a poor credit record are unlikely to land a loan from Payoff.  Other credit requirements:  You need to have at least two financila accounts that are open, and where you have been paying on time (i.e. credit cards, phone bills, car payments).  Also, in the last year, you cannot have opened more than one personal / installment loan.  Payoff is looking for people who want to consolidate their debt at a lower rate and save money, and more than one personal / installment loan may indicate that you are looking to add more debt.

Debt-to-Income ratio is calculated by taking the monthly payments of all your debt (i.e. student loans, credit cards, mortgages, etc) and dividing it by the sum of your monthly pay checks.  So if you make $3,000 per month and pay $600 per month for student loans and $600 in credit card interest, you would have a debt-to-income ratio of 40%.  Note – only the interest you pay each month (not the principal) on credit cards is included in your ratio.

Payoff operates in the following 19 states:

• District of Columbia
• Delaware
• Iowa
• Louisiana
• Massachusetts
• Maryland
• Michigan
• Minnesota
• Mississippi
• North Carolina
• Nebraska
• Nevada
• Ohio
• Oklahoma
• Virginia
• Vermont
• Washington
• Wisconsin
• West Virginia

The Summary

While Payoff does have strict lending criteria, it is among one of the most affordable lenders in the marketplace. Further, its overall financial wellness approach and a customer service back it up make Payoff a solid option for anyone with good or excellent credit.

If you have debt today, have been making payments, and have a 660 credit score or better, Payoff could be a good option to decrease your monthly debt payments.