Payoff Personal Loan 2020: A Savior for the Debt-Ridden

29 Sep 2020

One of the most common reasons why people seek personal loan is to pay off overdue balances on their credit cards. Since the interest rate on credit cards is exorbitant, it takes no time for a user to sink deep into debt. This is when a payoff personal loan comes into play. It helps an individual to consolidate multiple credit card debts into one single debt, and you can pay the same at a low rate of interest.

What is Payoff Personal Loan?

Payoff personal loan is the name given to a personal loan that we take to pay off overdue debt on one or more credit cards. The basic idea behind this entire credit service is to help people save on the additional interest outgo and streamline their finances. Let us understand this with the help of an example.

David owns three credit cards- Card A, Card B and Card C charging monthly interest at the rate of 2.5%, 3.5%, and 3% respectively. The overdue balances on these cards are as follows-

Credit Card

Current Overdue Balance

Interest Outgo in a Month*

Card A

$6,000

$150

Card B

$7,500

$262.50

Card C

$4,500

$135

*Considering that the user is not able to pay any amount whatsoever.

So, the total interest amount that David has to pay per month equals to $547.50 which is a significant amount. Moreover, the interest amount is added back to the outstanding debt, and in the next cycle, interest will be calculated on the total value which will lead to an even higher interest outgo. Now if David can take a payoff personal loan of exactly $18,000 at the given moment, he would be able to pay off all the three debts and save considerably on the interest payments along with additional penalties for late payment and over-limit charges.

Advantages of Payoff Personal Loans

With this type of unsecured personal loan, you can enjoy the following benefits:

  1. Consolidate Your Debt- It is always better to pay interest on a single loan than to pay interest on multiple debts simultaneously. Also, a single loan is easier to manage and pay off.

  2. Low Rate of Interest- It is not a surprise that credit cards are the costliest forms of debt in the market. When you use them recklessly, they can wreak havoc on your budget. A payoff personal loan is available at a comparatively lower rate of interest and on customizable terms.

  3. Credit Boost- When you get rid of multiple credit card debts, your credit score will show visible improvement gradually.

  4. Transparent- The application procedure is usually entirely online and fast. If you are eligible for one such personal loan and have all your documents in place, it should not take long before you can bid goodbye to credit card debts.

Who can apply for Payoff Personal Loans?

It can be a tricky question as an individual with multiple dues is likely to have a poor credit score. However, those who are regular with paying minimum due can also easily sink into debt when the remaining balances get rolled over. So, these are the criteria that an applicant is required to fulfill to eligible for a Payoff Personal Loan-

  • FICO Score of 640 or above

  • At least 3-year long credit history

  • No current delinquencies

  • No delinquency greater than 90 days in the last 1 year

  • Debt-to-Income Ratio of 50% or less

Payoff requires an individual to have at least 2 open yet satisfactory trade lines of on-time payments on his credit report. Any past-due payments/payment issues should be resolved before he applies for a payoff. He must have opened an account for a personal installment loan within the period of 12 months prior to the application. No joint application with a spouse is allowed. He must apply as an individual.

Taking control of your credit card debt is the first step to being financially sound. When you already have loads of debt on multiple cards, it may seem impossible to get out of such a scenario. You must consider taking Payoff Personal Loans in a situation like this as it gives you the power to reduce your interest payments and bring your financial situation back on track. It can help you consolidate all your prior installment loans such as student loans.

In case you are not eligible for a Payoff personal loan, you may also look for other personal loans for bad credit. Even if you can secure a high-cost personal loan, it would be better than paying recurring interest on multiple credit cards that compounds every month on the new balance. To learn more and apply for the loan, please fill out the blog form.

How to apply for a payoff personal loan?

Before starting the process of Payoff personal loan application, you should visit the online application site to enter some of your personal financial information. This will give you some useful information related to the kind of rates you are eligible for. You can review the terms and conditions associated with various loan packages to get the much-needed comparative insights. This will help you make an informed decision about the payoff loan package that suits your needs the most.

After you have decided on your payoff loan, you will require to complete the application process. You can do so online by uploading your relevant documents. Though the required set of documents vary from person to person, usually they include-

  • Identification proof ( such as passport/ driving license etc)
  • Income proof related to two of your recent employment. If you are self-employed, you need to provide Schedule C, K-1, Form 1040 other tax documents.
  • Most recent bank statement
  • Mortgage statement, if any

You should make all your documents ready before proceeding with your online application. Once the uploading is complete and the documents are attached to your online application, you will be provided with login credentials to check the status anytime. Alternately, you can also call at the toll-free number of your creditor if you have any queries to make.

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