Sometimes people can’t help but to get a loan from lenders because they need a big amount of cash for emergency purposes or to purchase properties that people need, such as a home or a car. A loan is usually paid in a set period along with an interest rate. However, if you’re fortunate enough to obtain money to pay off the rest of your loan in advance or on time, you need to know first how much is the total amount you owe to the lender. After all, they sneak in additional interest or make some changes on your loan, depending on the terms you agreed to while making that loan. If you want to know how to acquire a loan payoff statement, read the article below to guide you on how to do it.
10+ Loan Payoff Statement Samples
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What is a Payoff Statement?
A loan payoff statement, or sometimes called a payoff letter, is a written document that states the exact amount of money that the borrower needs to pay off their loan. The payoff amount doesn’t only state just the outstanding balance but it also includes any interest the borrower owes and any potential fees that the lender might charge. The payoff statement can also be used to change or consolidate the borrower’s debt as well.
How to Obtain a Loan Payoff Statement
1. Contact the Lender
If you’re dead set on paying off your loan, you’ll need to contact your lender first and inform them you’re paying off your loan and you want to obtain the latest information on your loan. Depending on the lender, they might ask you may to sign in to an online account, or send a formal letter or email or fill out a form for the request process.
2. Provide Personal Information
In the request form, you will need to provide your personal information such as your name, signature, contact information, account number, address, and the date of when you want the payoff to be effective. Some lenders may require you to provide a reason why you’re choosing for an early payoff.
3. Review the Payoff Statement
Once your request has come through and you receive the payoff statement, regardless of the lender, the statement has similar details included in it: the expiration date of the payoff amount, instructions on where to send the final payment, the person assigned for you to make the check out to, cashier’s check details, extra fees that will be charged to you to include along with your payment, and an adjusted amount your due to pay in case you pay after or before the payoff date. Review the fees that are added to your payoff statement. The fees might include administrative, recording, or delivery fees.
What fees may be present when paying off a loan early?
This may be surprising to some borrowers, but some lenders charge some fees if the borrower pays off a loan before they complete the given period to pay back their loan. Some of these costs are:
- Generation fees: Thi is just a fee that some lenders charge on mailing or faxing the statement letter to you. The costs are very minimal and sometimes, the lender won’t charge you for this.
- Processing fees: This fee is charged by your lender for handling the payment and closing out your loan account.
- Prepayment penalties: This type of penalty is rare for lenders to charge, however, some lenders have prepayment charges that require you to pay along with your loan.
What are the 4 Cs of lending?
The four Cs of lending is the four components that lenders evaluate to determine if they will allow the borrower to get the loan. These 4Cs are capacity, capital, collateral, and credit.
Before you proceed to start the process of paying off your loan, review the payoff statement to ensure that the personal details in your account are accurate. If you’ve got any concerns or questions, don’t hesitate to reach to the lender and straighten out all the details with them. You need to understand the statement completely by letting them explain why they charge those extra fees and how they calculated the payoff amount. To help you know what a loan payoff statement is usually formatted, download our free sample templates above to use as your guide!
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