Payoff Statements: What They Are and How They’re Used

How much money does it take to actually pay off a loan? If you’ve ever taken out a loan, you’ve probably asked yourself this question. Because of interest and fees, it’s sometimes hard to figure out how much you’ll pay in the end. 

If you want to know what it will take to pay off a loan, you’ll need to access a payoff statement (sometimes called a payoff letter). This document will tell you the amount that you’ll need to pay before your balance is resolved in full. 

What Is a Payoff Statement?

📄 A payoff statement is a document from your lender that shows the exact amount you need to pay to completely pay off your loan, like a mortgage. Lenders create these statements when you ask for them.

Payoff statements always include the following information:

• The account number

• The full payoff amount that must be paid to close the loan, which may include additional accrued interest, fees, or prepayment penalties (if applicable)

• “Good through” date, also called the payoff date, which is the date when the loan should be paid off in full

Payoff statements might also include additional information, such as: the loan's interest rate, interest that will be rebated due to early payoff, the remaining payment schedule, and how much you'll save if you pay the loan off early.

💡 The payoff amount listed is only accurate through the "good through" date. If you don’t pay off the loan by that date, you’ll need to ask for a new payoff quote. That’s because the amount you owe may change. Extra interest can build up, new charges might be added, or early repayment benefits could affect the total amount.

Are Payoff Statements and Monthly Statements the Same?

No. Payoff statements and monthly statements aren’t the same thing. A payoff statement shows the total amount you need to pay to fully pay off your loan. This includes the remaining balance, any interest that’s built up, and any fees.

Monthly statements, on the other hand, show your current loan balance and the amount due for your next regular payment. They don’t include interest that will build up in the future or any special fees. That’s why the payoff amount is usually higher than the balance you see on your monthly statement.

How Do You Get a Payoff Statement?

You can request a payoff statement at any time from your loan servicer. This is the company that handles your loan payments and sends your billing statements. It applies to all kinds of loans, including mortgages, car loans, student loans, and personal loans.

If you’re a homeowner, for example, you’d contact your mortgage servicer to ask for a mortgage payoff statement. This is often called a payoff request. Just asking for one doesn’t mean you’re committing to paying off the loan early. It just gives you the information you need to make that decision.

Many online lenders will show your payoff amount right on your account dashboard or send it digitally. Traditional lenders may mail you a formal payoff letter after you request it.

When Are Payoff Statements Used?

Payoff letters are often requested when someone is selling their home, refinancing their loan, or planning to pay it off early and needs to know the exact amount they owe, but they can also be used for other reasons.

Mortgage Refinance

If you own real estate, you likely have a home loan, which is called a mortgage. It doesn’t matter whether you're refinancing to avoid foreclosure or if you want to lower your monthly mortgage payments.

Either way, your new mortgage lender may ask for a payoff statement to see how much you owe on your current loan before they grant you a refinance loan.

Debt Consolidation Loans

Debt consolidation occurs when you, as the borrower, decide to streamline various debts you owe into a single loan. If you've applied for a debt consolidation loan, the new lender approving the loan usually requiresyou to provide payoff statements from your current creditors.

Debt Relief Companies

Debt relief companies help people try to lower their debt by negotiating settlements or consolidation loans with lenders. If you’re working with one of these companies, they’ll likely ask for payoff statements from your creditors. These statements show your current balance and the total amount needed to pay off each loan, which helps the company negotiate better terms on your behalf.

Collection Actions

If a creditor decides to take collections actions against you to collect money owed, they will usually send you a payoff statement. This statement will usually include account identification information (like your loan number) and payoff requirements necessary to stop further collection actions from going forward.

Liens

Payoff statements may also be used with liens. Liens are commonly placed on high-value items like cars or real estate. The payoff statement will come with a notification that a legal claim has been made to seize your property if you don’t pay the full amount listed in the payoff statement.

Liens may also be sent to homeowners who are about to go into foreclosure.

Let's Summarize...

Payoff statements are common, but remember that they’re not the same as monthly statements. Payoff statements are statements prepared by lenders or creditors identifying an exact amount necessary for full payment of a loan, a mortgage, student loan debt, or other debt. They’re often used in refinancing, consolidation loans, debts in collections, and other situations wherein a lender wants to know how much must be paid to satisfy a loan. 

If you have debt and you want a payoff statement, you can request one by contacting whichever lender or creditor holds the debt. And don’t worry, you don’t have to pay off the loan early just because you’ve requested a payoff statement. This document is to be used for your reference, nothing more.