The Best Loan Payoff Letter Sample [Guide]

A customer may ask for the sum necessary to pay off a loan's outstanding balance by a specific date in a letter known as a loan payoff request.

If you intend to pay off the remaining balance on a loan early, you might want to request the details of the balance due. This balance is different from the one that appears on your most recent statement.

You will be able to get specific information that you would not otherwise have access to by asking for a payoff amount and date.

What Is a Letter of Loan Payoff?

A letter outlining the loan's terms and providing instructions for paying it back is known as a loan payoff letter. The lender is responsible for writing the letter and sending it to the debtor.

By supplying this letter, mortgage lenders can determine how much of the applicant's income goes toward paying off existing debt.

A Loan Payoff Letter request may be made by the debtor at any time, not just at the start of monthly payments. This letter may be useful, for instance, if the owner of a car decides to sell it after just paying off the loan on it.

The seller needs some time to get the title replaced, get the confirmation of ownership, and get the lien release. A payoff letter template can speed up the transaction by attesting to the lack of a loan on the car or any other things.

What Causes the Difference Between the Payoff Amount and the Balance on My Most Recent Loan Statement?

For several reasons, your payoff amount will be different from the balance listed on your most recent loan statement.

In the first place, interest will keep building up between your most recent payment and the payoff date. Second, paying off a loan early may result in fees.

Third, to prepare the payoff amount or to close the account early, your bank might charge a processing fee.

You will always be able to avoid paying interest on the period between your payoff date and the last day of the loan's scheduled payments. Paying off a loan early makes financial sense just for this reason.

Remember: If you are having trouble making your payments, your creditor might agree to settle your account for a lot less money than you owe. You can move toward financial stability by making plans to pay off your debts in this manner.

When to Write a Letter Requesting Loan Repayment

Write a loan payoff request letter when you have enough money to pay off the remaining balance on your auto or personal loan.

You can use this letter to ask for the mortgage payoff amount as well. However, your lender or title company will typically write this letter and let you know the payoff amount if you are selling or refinancing your house.

Asking for documentation that you have fully repaid a loan and are no longer in need of it is another reason you might send a payoff request letter to the lender. This particular payoff request letter might be required to release a lien on a vehicle you recently paid off.

What to Put in a Letter Requesting the Repayment of a Loan?

You must include the following in your letter requesting repayment of the loan:

Name

Your contact details

your customer number

kind of loan.

How Can I Get a Letter of Loan Payoff?

The lender shall provide the debtor with a Loan Payoff Letter upon request. Contacting customer care through phone or email is required for this reason.

Some lenders provide their customers access to an online automated system that enables online requests. The loan payoff letter typically arrives to the debtor in 6 to 10 business days.

How Do You Write a Letter Repaying a Loan?

You should use the following data in your example Loan Payoff Letter to outline what a borrower must do to repay a loan in full:

The website header should include the name and contact information of your company.
"Loan Payoff Letter" is written in bold in the middle of the page.
the lender's complete name and address. Include the name and title of the agent in charge of the account, if there is one.
a memo introduction (either ATTN or RE) with the borrower's name, complete address, and account number
greetings to the borrower first.
a brief introduction noting that you have received the borrower's request to settle the remaining amount of the loan by the next payment due date. Include the amount of the initial loan and the amount that still has to be paid on the balance of the loan. To provide the borrower with a clear, final total amount owing and the need that this amount is paid by the due date specified, you will need to compute the extra interest that has accrued.
Explain to the borrower that if the payment is not made by the due date, interest will continue to accumulate on the loan and that you, the lender, retain the right to charge extra fees in light of the borrower's tardiness in making the final payment.
Indicate all accepted ways of payment and how the final payment may be made (by phone, mail, or in person). Give the borrower a complete postal address where they may send the last payment and a mechanism to track the progress of their payment to make sure it was received by the payment due date mentioned above.
Give the borrower guidelines for seeking a delay of the final payment if they discover they won't be able to pay the balance by the due date but wish to inform your offices before the due date to prevent extra costs.
Message to contact your office if there are any more inquiries.
Greetings in closing.
Name, title, and name of the financing organization.

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1. Personal Loan Payoff Letter Sample

[Name of Borrower]
[Address of Borrower]
[City, State, Zip Code]

[DATE]

[Name of Lender]
[Address of Lender]
[City, State, Zip Code]

RE: Personal Loan Payoff Letter

Dear [Name of Lender]:

This letter serves as an official confirmation that my personal loan was fully repaid in the amount of [AMOUNT] on [DATE]. Please find included the cheque for the final payment required in the amount of [AMOUNT].

Please take notice that the loan must be repaid following our loan repayment agreement on or before [DATE] and that this payment is being made on [DATE].

As a result, my loan has been entirely returned by the conditions of the payment arrangement. As such, I ask that you sign the copy of this letter that is included and send it back to me to show that you agree that my loan has been properly repaid.

I may be contacted at [Phone Number] or [Email Address] any day after [6pm] if you have any queries.

I appreciate you providing the personal loan to me.

Sincerely,

[Signature of Borrower]

Name of Borrower
List of Enclosures:

Check for [AMOUNT]

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2. Car loan Payoff letter template

{Your name}

{your address}

{your phone number}

{your email address}

{date}

{lender name}

{lender institution name}

{lender address}

RE: Request for loan payment in the amount or with the required verification

Dear [Name of Lender]:

I'm writing to ask for the repayment sum for my loan of the specified kind. The account number is the number on my account. If feasible, I plan to settle the remaining sum on this loan on a date.

-OR-

I'm now looking into my choices for paying off my debt to [name of lender]. The account number is the number on my account. Please provide a single lump sum payment equal to the payback amount you are willing to accept as a settlement. Send details regarding other settlement options as well, please.

-OR-

I just completed my 'kind of loan' loan's last payment. the account number is the number on my account. Why do you need evidence of payment? I need proof of complete payment, please.

I appreciate you taking the time to read this and consider my request.

Sincerely,

{your signature}

{your name}

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The Best Loan Payoff Letter Sample [Guide]