If you're struggling to manage high-interest credit card debt, one solution is a Payoff personal loan. This review of Payoff credit card refinancing loans will show you how consolidating your debt can save you time and money.
You may even seen an immediate improvement to your credit score.
On top of that, Payoff incorporates an optional personality test developed by the founder of eharmony.com. This really helps learn more about how your personality intersects with your spending and saving habits.
This is a cool tool if you want to understand how to get and stay out of credit card debt.
Here's what you need to know about Payoff's credit card refi loan program, and if this solution can work for you.
Overview of Payoff Loans
Payoff offers personal loans specifically designed to refinance your credit card debt to a lower rate.
These loans save you time by turning several credit card balances into a single loan, with one monthly payment.
You save money with Payoff by refinancing to a lower interest rate and including principal with each payment. (As opposed to making a monthly minimum credit card payment, which leaves your principal untouched and still accruing interest.)
And you improve your credit score when you payoff the balance of one or more credit cards.
How Payoff Loans Work
You start by completing an online application at Payoff.com to see your loan rate. (FYI, this will not affect your credit score.)
Payoff will then give you several offers so you can pick the loan option that works best for you.
After you're approved, you will need to verify your personal information so the loan proceeds can be electronically deposited into your bank account.
From there, you can use the loan to pay off your credit card balances.
What You Get with a Payoff Loan
- Safe and secure application process
- Borrow between $5,000 and $25,000
- Fixed interest rate of 6% to 19.65% (APR of 8-22%), depending on your creditworthiness
- Terms of 2 to 5 years
- Payoff has no application fee, prepayment fee, teaser rates, hidden fees, or late fees. Returned payments carry a charge of $15.
- There is a one-time platform fee that's deducted from your loan amount. This fee is 2-5%, depending on the length of your loan.
- Tools to help you improve your finances, with recommendations based on personality type.
It is the inclusion of the platform fee that causes the APR for the Payoff Loan to be higher than the fixed interest rate on your monthly installments.
We think this origination fee is reasonable, and similar to fees charged by credit card issuers as part of making a balance transfer. (Yes, even 0% APR balance transfer offers come with a 3% to 5% transfer fee.)
The longer your loan term, the higher the platform fee.
- A 24-month loan has an origination fee of 2%.
- A 60-month loan has a 5% loan origination fee.
Qualifying for Refinancing with Payoff
Payoff has strict direct lending requirements, and uses an algorithm to determine if you're likely to achieve your goal of paying off your debt or just go into more debt if approved.
To be qualified, you must meet the following qualifications:
- FICO score of 660 - 850, or Vantage 3.0 score of 680+.
- Debt-to-income ratio of 50% or less.
- At least 3 years of credit history.
- No unpaid tax liens.
- No current delinquencies and no delinquencies greater than 90 days in the last year.
- At least 2 open, satisfactory trade accounts.
- No more than 1 installment loan taken out in the last year.
While Payoff's lending requirements may seem strict, remember that they're looking for consumers who are in credit card debt, but responsible and pay on time. If you have bad credit or limited credit history, you are unlikely to qualify for a Payoff personal loan.
The Payoff installment loan is not yet available in Alabama, Arizona, Colorado, Connecticut, Delaware, Illinois, Indiana, Iowa, Kansas, Louisiana, Massachusetts, Minnesota, New Hampshire, New Jersey, Pennsylvania, South Dakota, Texas, Vermont, and Wyoming.
For residents of those states, you may still be interested in checking out the tools offered as part of the Payoff Lift Program, which we explain below.
How Payoff Loans Work
You can start by completing an online application at Payoff.com to see your loan rate. FYI, this will not affect your credit score.
Payoff will give you several offers so you can pick the loan option that works best for you. After you're approved, you will need to verify your personal information so the loan proceeds can be electronically deposited into your bank account.
From there, you can use the loan to pay off your credit card balances. Make sure you stop using your credit cards afterward so you can focus on paying off the loan and saving money.
Payoff Lift Program
If you are not approved for a loan, or reside in a state where you are not eligible for one, you are given access to Payoff's Lift Program. Lift provides tools and training to help you improve your credit score and get out of debt.
The Lift program is actually very helpful with a dozen topics to help you understand your financial situation, where your money goes, how you spend, how to save money, and how to accelerate your debt repayment plan.
If you find yourself wondering how you managed to accrue so much debt or you don't know how to get going to pay off your credit card debt, the Lift program is a good place to start.
Each topic includes several insightful lessons.
And the lessons incorporate behavioral science.
Lift believes that "by understanding what influences your financial choices, you can create a richer and healthier life, both financially and otherwise."
For this reason, the Lift program incorporates a personality test developed by Dr. Galen Buckwalter, the creator of eharmony. Apparently, he shifted his focus from finding you to finding you financial happiness with Payoff.
Hopefully, by understanding yourself and your spending habits better, you will be better prepared to get out of debt.
The Bottom Line
Payoff is one of several companies that offers credit card debt consolidation and personal loans, although they do it a bit differently.
Their loans are specifically designed for consumers who are responsible and keeping up with their monthly payments but feel like they can't get ahead of high-interest debt.
If you have good or excellent credit, it's worth it to apply for a Payoff loan to see the type of interest rate you're offered. Doing this won't affect your credit.
Don't forget to factor in the loan origination fee (2-5% of your loan amount) to determine if it's worthwhile to refinance your credit card debt.
- Payoff credit card debt faster.
- Simplify payment by consolidating loans.
- Save money with APRs starting as low as 8%, or it may be as high as 22% (depending on your credit history) -- which may still be lower than you're already paying on your credit cards.
- Easy online application process.
- Safe rate check -- submitting an application will not affect your credit.
- Improve your credit score by consolidating and paying off your credit card debt.
- No card cutting necessary.
- No hidden rates or fees: this means no application fee, no late fee, no prepayment fees.
- Origination fee makes loans more costly if plan on paying down faster than the amortization schedule.
- Need a fairly clean existing credit profile to qualify.