When a borrower is able and interested in paying off the remainder of a loan in full, they will need to use a Loan Payoff Letter prior to making the payment. This letter will ensure that the instructions for paying off a loan are completed correctly and to notify the borrower what the expected final amount will be if the payment is submitted by the date listed in the letter.
These letters can be used with nearly every kind of loan, including auto loans, mortgages, and student loans. A personal Loan Payoff Letter informs the recipient about the details of payment of the debtor's personal loan. Loan Payoff Letters for student or auto loans can be required by mortgage lenders when an applicant applies for a mortgage on a new house.
Providing a Loan Payoff Letter allows mortgage lenders to assess how much of the applicant's income is used to repay existing loans. Use our ready-made templates when drafting your document:
The Loan Payoff Letter usually contains the following:
When a loan is paid off, the lender should compose an additional letter that contains proof that the payment was made in full, the account is closed, and there is no additional liability of the debtor.
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