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Payoff Letter: How it can help you with Loans

Definition of a Payoff Letter.  What is a Payoff Letter?

A Payoff Letter is a letter that is often required by a Lender to prove that other loans you have are paid off and have a $0 Balance.

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Examples of reasons Payoff Letters are requested:

      • A request to show other small business loans are paid off.
      • A request to verify that a credit card is paid off
      • A Letter showing that a similar type of loan has a zero balance and is paid off.

    Many lenders may want to make sure that certain loans are paid off in order for them to be willing to approve and fund a new loan. Get a loan with out one, apply below.

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    Did you know?

    These Letters are also called “Zero Balance Letter”

    They are often referred to this way to emphasize that the Letter needs to show that the balance is Zero.

    What are Payoff Letters?

    Customers cannot always provide this letter.
    Sometimes customers are not well versed in this field.  Another reason is they also don’t like getting paperwork together and are unsure how to do it.   Customers also see it as a burden that they do not have the time or desire to deal with.

    How to Handle a Payoff Letter request:

    If a Lender asks you to provide a Zero balance letter, find out which Institution it is.
    If you have more than one loan with that institution, get the Account number to make sure you will be getting the information for the correct account.    Once you have this information, call the customer service number for that Lender.

    Tell the Representative what you need and they will transfer you to the correct department.  Most Companies have specific Departments that handle this type of request.   You will be routed to that Department and they will provide the Letter.  In most cases you will receive the Letter in 2 to 4 hours.

    If you have been asked for this type of Documentation, call us to discuss.   Explain what you are being requested to provide.   There are other Financing products that do not require this and other forms of verification.   You can apply for other Financing options and avoid having to provide this type of Documentation.

    FAQ Payoff Letter Questions

    What is a Payoff Letter?

    A payoff letter is sent by a lender showing the amount required to payoff the borrower’s loan by a certain date. It often shows how much the payoff increases each day or month when not paid by that date.

    How can a Payoff Letter help me?

    It proves the total amount you owe to a lender. Without it, a new lender has to guess or estimate how much you owe. Lenders may offer less or decline your request without this information.

    How do I get the letter?

    Contact your existing lender and ask them to send you a payoff letter. Ask them to address it to whom it may concern and put a date through which the payoff is valid.

    What is a payoff demand letter?

    A payoff demand letter is issued by a lender that demands the borrower to payoff the transaction. It includes the total amount owed, a pay-by date, account number and payment options. It also lists next step consequences if not paid.

    What does it mean to request a payoff?

    Requesting a payoff means a borrower contacts their lender and asks how much is owed to payoff their loan and by what date. After payoff, borrowers should verify the lender shows their loan fully paid off.

    What is a Zero balance letter?

    A zero balance letter is issued by a previous lender to a borrower to show their loan has been paid off and has a zero balance. New lenders may ask for this when considering a loan.

    Learn more about other types of request for proof of Documentation such as
    Proof of income.

    Recent examples from the Web:

    Therapeutics Corporation entering into a Payoff Agreement and Letter.