Payoff Review

Payoff offers unsecured, fix-rate loans. The loans are designed to pay off existing credit card debt. Payoff's website is very informative and transparent and their online chat was quick and useful. Overall, they appear to be a solid choice.

They are a Los Angeles based company that was founded in 2009 and launched Payoff in 2011. They have made over $1B in loans and have raised over $140M in equity. They appear well backed and have investors and advisors with backgrounds in payments and financial services.

Product Rates

Payoff offers fixed-rate, $5,000 to $35,000 loans at APRs from 5.99% APR to 24.99% APR. The loan payback period is between 2 and 5 years. They charge a 0% to 5% origination fee. There are no application fees, prepayment fees, late fees, returned check fees, or annual fees.

An example loan of $16,000 at 10.99% APR will have a monthly payment of $407 and will be paid off in 48 months.

Eligibility

We love that Payoff is able to clearly lay out their criteria. We love transparency. It also suggests a disciplined use of clear underwriting models. They list their criteria as,

• FICO® Score: 640 plus

  You can't have really bad credit to qualify for a Payoff loan.

• Debt-to-Income Ratio: 50% or less

  Your total monthly payments for other debt (credit cards, car payment, etc.) can't be more than half of the money you bring in every month.

• Age of Credit History: 3 years of good credit

  This basically shows you aren't new to debt. You need to have had a credit card or some form of debt for at least three years. These loans need to be in good standing, i.e. either you are paying them on time or have paid them off.

• Open and Satisfactory Trades: 2

  You must have 2 or more open and active accounts. Only one of these can be an installment loan, e.g. another personal loan. It was not clear to us if this was a minimum or a maximum requirement so we used Payoff's online chat. They quickly confirmed it was a minimum. Great tool.

• Delinquencies: 0

  You must be current on all your accounts with no 90 plus delinquent accounts over the past 12 months.

You will also most likely need the following documents for verification,

• Bank information to link your bank account
• Driver's license, passport or state-issued ID to verify your identity
• Two most recent paystubs or most recent tax return if self-employed to confirm your income

Like most online lenders today checking your eligibility does not impact your credit score but if you do decide to apply Payoff will do a hard pull of your file. This will generally negatively impact your credit score in the short term. Over the long term, the responsible use of credit and the reduction of debt will improve your credit profile.

Based on a study of Payoff Members between August 2018 and February 2019. Payoff Members, who paid off at least $5,000 in credit card balances, saw an average increase in their FICO® Score of 40 points within four months of receiving the Payoff® Loan. Everyone's own results will obviously vary but basically paying on time and freeing up available credit typically improves your credit rating.

Funding Source

Payoff is not exactly a direct lender but they are not a matching service. Although they partner with financial service firms and loan their partner's money out they differ greatly from matching services in that Payoff appears to really drive the underwriting process. In addition, they appear to be their financial's partner's sole partner for this type of product. For this reason, we have included them in our ranking as a direct lender.

In fact, we think they have a very interesting business model. It appears they partner with Credit Unions. This means they may have tapped into an inexpensive funding source and hopefully are able to pass these savings on to you. Credit Unions are efficient collectors of deposits but most of them lack the national footprints or access to capital to run efficient lending operations. Partnering with Credit Unions and lending nationally is a great match and creates a very interesting play for Payoff.

Payoff uses behavioral data models and analysis to improve their underwriting. They claim their models have reduced risk by 30%. We think efficient modeling that reduces risk and increases revenues is a base requirement to perform well in this space but love it if Payoff's performance translates into better rates for those whose qualify.

Payoff

We like Payoff's clear transparent approach. They are a licensed lender with competitive rates. We think they make a great choice if it makes sense for you to borrow.