Payoff Review

Payoff Review: Does Payoff Really Work? 2022

We may earn money or products from the companies mentioned in this post at no extra cost to you. Thank you for supporting the work we do.

Sharing is caring!

Payoff Review

With more than $820 million worth of credit card debt in the U.S., it’s not surprising that many people are seeking some sort of debt relief. One of the most common methods of relief pursued by those who owe credit is through debt consolidation. Non-bank entities are popping up more often, including Payoff by Happy Money. But is Payoff actually effective?

Payoff has earned consistently high ratings on some of the most reputable credit-checking websites available. With 5/5 stars on LendingTree and 4.7/5 stars on Credit Karma, it’s safe to say Payoff works as long as you follow each step correctly.

In this article, we’ll review both the good and less ideal aspects of Payoff. After reading this article, you’ll have a good idea of what Payoff is, what it’s good for, the pros and cons of using Payoff, and how to use Payoff correctly.

What is Debt Consolidation?

Before we get into what Payoff is and everything that should be considered before using them for debt consolidation, it’s important to have a good idea of what debt consolidation is. Debt consolidation is a method of debt payoff that involves putting multiple debts onto one account.

Debt consolidation can be done with or without a loan and using it comes with a variety of benefits:

  • One Monthly Payment: Using debt consolidation means you’re putting all of your debt into one account. While doing this makes it seem like a lot of money, you’re really just putting everything into one place. Only having to worry about one monthly payment can take a lot of bill stress away.
  • Cheaper Monthly Payments: Along with the convenience of only having one payment to worry about, your monthly payment will also be significantly less if you only have one account you’re paying into.
  • Lower Interest Rates: One of the goals of debt consolidation is to lower your monthly interest rates. When you achieve a lower interest rate, your monthly payments become even more affordable and easier to pay off.
  • Faster Payoff: When you have one single payment and one low-interest rate, you’re more likely to pay each debt off quicker. 

Debt consolidation works when low-interest rates are achieved. In order to get to that point, there are four steps to follow to ensure you get there. First, you need to add up all of your existing debt. Doing this will help you decide what kind of loan you need if you choose to go that route.

Once you’ve compiled all of your debt, you should calculate your average interest rate. Each credit card and bank loan will have a different interest rate and monetary amount. In order to find the best possible deal, it’s important to know what a good interest rate would be for your current situation.

After calculating your average interest rate, you need to decide what an affordable monthly payment would be for you. Create a general budget that includes any necessary expenses like rent or mortgage, groceries, bills, and others like that. Whatever leftover money you have after these calculations would be a starting point for you.

Finally, you should do your own search on what the best debt consolidation plan is for your situation. While there are other kinds of debt consolidation, like home equity and debt settlement, we’re going to focus on Payoff and its debt consolidation loan.

Related content: List of the top debt payoff apps

What is Payoff?

Payoff is a debt consolidation company that specifically focuses on credit card debt consolidation. The company offers fixed-rate personal loans to its borrowers for the purpose of paying off credit card debt. Their loans take multiple high-interest credit card payments and roll them into one account with a lower interest rate.

According to their website, Payoff is comprised of financial services professionals, research and clinical psychologists, data scientists, neuroscientists, technology experts, and member advocates. Member advocates are the staff who work one-on-one with borrowers to ensure they have the best possible experience.

Who is Payoff Good For?

While they offer an effective way to consolidate and pay off credit card debt, Payoff is only good for certain people. If you have debt on multiple credit cards with high-interest rates and you want help building your credit score, Payoff is a solid option to consider.

With that said, you need to meet certain criteria in order to be approved for a Payoff loan. You should have at least three years of credit history before applying, and to get approved, you need to have a FICO credit score of at least 600.

On top of that, Payoff recommends resolving any delinquencies on your credit score before applying for their loan. They may also consider your debt-to-income ratio, open and satisfactory trades, and your utilization too.

Related content: Looking for free debt tracker printables?

How to Use Payoff Effectively

To use Payoff effectively, you need to make sure to follow each step in the process they layout for you. For starters, you need to apply for the loan. The Payoff loan uses a simple application process that shouldn’t take more than five minutes to complete.

The first step in the application process is to check your rate. Payoff will do this for you at no cost or commitment. Checking your rate via Payoff won’t affect your credit score either, so it’s good to use this step whether you choose to move forward with Payoff or not.

After finding your rate, you’ll explore the terms offered by Payoff based on your calculated rate. Payoff uses fixed rates and typically offers between 5.99% APR and 24.99% APR. Their loan amounts vary from $5,000 to $40,000 and you have the opportunity to select any term from 2-5 years.

You’ll then be charged an origination fee of 0%-5%, but this is a one-time payment and there are no other fees attached to your loan.

Once you’ve decided on a rate and term, you’ll need to verify your information. This is the step where you review your chosen terms and verify all information before giving your eSignature. Once approved, your funds will be directly deposited into your account.

Next Steps…

So you see the money in your account, what are you supposed to do now? Do you pay everything all at once or a little at a time? Actually paying off your debt with the funds you receive can feel intimidating once it’s right in front of you. However, there are some helpful things to remember in order to avoid falling behind:

  • Prioritize Your Bills: Before making any payments, you need to decide which one needs your attention first. You should decide whether you want to pay off an entire debt or stick to smaller payments over time. 
  • Business as Usual: Just because you have the funds to pay your debt off right away doesn’t always mean you should. If you want to build your credit, it’s better to make monthly payments rather than a one-time lump sum.
  • Deal With Small First: To reduce the amount of debt you owe, it may be smart to pay off credit cards with low debt balances due. This way, you can check them off your to-do list and focus more of your energy on the heftier debts.
  • Don’t Forget Payoff: Most importantly, don’t forget to pay back Payoff. Missing multiple Payoff payments will have a negative effect on your credit score.

The Pros and Cons of Payoff

Before deciding whether or not to move forward with Payoff, it’s important to be mindful of both the good and bad aspects of using a debt consolidation loan.

Payoff Pros

  • Free Monthly Credit Score: Regularly monitoring your credit score is the best way to ensure you maintain good credit. When you have a loan with Payoff, you have access to one free credit score per month without it affecting your existing credit score at all.
  • Direct Creditor Payments: Getting a debt consolidation loan through Payoff also gives you the option to have Payoff send your funds directly to a specific creditor. This is a good idea for anyone who wants to get rid of their debt quickly.
  • No Initial Hard Credit Pulls: Before applying to get a loan, many places will perform a credit check. Hard credit pulls will negatively affect your credit score while soft pulls will not. Payoff uses soft credit pulls to check your score while applying, so you don’t need to worry about a ding on your score. However, they do perform one hard credit pull after you accept your loan terms.
  • Science-Based: Payoff uses expertise from various psychological professionals to optimize your borrowing experience. When you have a loan with Payoff, you gain access to scientific personality and stress assessments. These assessments are meant to help you get the best tools for increasing your financial literacy.
  • Free Emails: Whether you decide to take out a Payoff loan or not, Payoff offers a free 6-week email series called “Peace.” Peace sends regular tips on how to deal with different aspects of financial stress.

Payoff Cons

  • No Immediate Funding: After accepting terms from Payoff, it takes at least two days for the money to hit your account. While this timeframe is certainly more ideal than other debt consolidation companies, it can still be frustrating not seeing the money right away. 
  • Origination Fee: Although not every borrower will be charged an origination fee, some circumstances will entail an origination fee of up to 5%. The fee is taken off of the total amount of money borrowed. However, this is the only fee charged by Payoff.
  • No Autopay Discounts: While some debt consolidation companies offer some type of discount when setting up Autopay, Payoff does not. 
  • No Other Loan Options: Unfortunately, Payoff only offers unsecured credit card debt consolidation loans. This bars those applying from submitting joint applications or adding a co-signer to the loan itself. You also won’t have the option to secure your loan with collateral to get a better rate.

Related content: Get rid of debt with our free printables

Payoff FAQ

1. Will using Payoff hurt my credit score?

When initially applying for a Payoff loan, you’ll only be subjected to a soft pull on your credit score. This initial pull won’t affect your credit score, however, a hard pull is performed after you accept your loan terms. This hard pull will put a ding on your score that will temporarily cause it to drop.

2. What credit score does Payoff use to determine eligibility? 

To determine your loan eligibility, Payoff checks your FICO credit score. Your FICO score is a three-digit number that is based on the contents of your credit report. This number is essentially a summary of your overall credit. To be considered “fair/good,” your score should be at least 600.

3. How long does it take to get a loan from Payoff?

The application process only takes around five minutes. Once you’ve been approved for a loan through Payoff, you should see your loan funds in your account within 48 hours.

4. Is Payoff a bank?

Payoff is NOT a bank. The company works with certified Lending Partners to originate their loans. Payoff works with a variety of certified Lending Partners, including Alliant, Blue, Cross River, First Tech, GreenState, TEACHERS, TechCU, USAlliance Financial, and Veridian.

5. What are the requirements to get a loan with Payoff?

To receive a loan through Payoff, you should meet the following criteria: 

  • FICO score of at least 600
  • Three years of credit history
  • At least two open accounts on your report
  • Minimum monthly cash flow of at least $750
  • Low debt-to-income ratio
  • Zero delinquencies
  • Income verification
  • No bankruptcies within the last two years
  • A valid social security number
Does Payoff Really Work?

Does Payoff Really Work?

All in all, Payoff is a legitimate means to consolidate and pay off your credit card debt. With that said, it’s essential you meet them halfway in the payment process. Unless you choose to have them directly pay your creditors, you’ll need to keep up with monthly payments and remember to pay them back each month.

Staying on top of your credit card debt is key during this process and that includes the loan taken out with Payoff. After all, a loan is a loan.

Conclusion

If you’re looking for a reliable partner to help you consolidate your credit card debt, we recommend checking out the Payoff website and seeing how much easier it could be than trying to manage everything yourself through traditional channels like banks or other lending institutions.

You Might Also Enjoy:

Sharing is caring!

Scroll to Top