A Loan Payoff Letter is a formal document the lender gives to the borrower to provide the latter with all the details they need to know about the existing debt. Whether you took out a mortgage for your home or you have a student loan to your name, you can request this short note from the lender to obtain instructions and guidelines on how to pay back the loan in the nearest future. It is possible to get a hard copy of the document or make an online request via email or the website of the financial institution.
Download a sample Loan Payoff Letter to use as reference through the link below.
If you request a Loan Payoff Letter after you have made all of your loan payments, the document will confirm the lender does not have any more claims regarding the loan, and your account is currently closed. Additionally, a letter of this kind will help you solve omissions and discrepancies in your credit report - ask the lender to indicate the correct amount of the loan you still owe and present it to a credit bureau to fix the mistake. Once you have this statement, you can submit it directly to a potential new lender to show you do not have other outstanding loans.
Typically, Loan Payoff Letters tell the debtor the total amount of the loan and its remaining balance, the date the payoff option expires (if you fail to pay off the recorded sum of money by this day, there will be more interest to deal with later), charges included in the payment (fees and penalties), and the account or address where the payment (sometimes, in the form of a money order or check) must be sent.