Why a Payoff Quote May Differ From the Statement Balance
Consumers must understand that when they look at a loan statement balance, whether it be a car loan or another type of loan, the amount shown on the loan statement balance may differ from the total payoff amount.
To learn the actual amount needed to pay a loan in full, the borrower must contact Consumer Portfolio Services and request a payoff quote.
The Payoff Quote
A payoff quote provides the exact amount needed to pay the loan in full. This quote includes accrued interest and any fees or benefits not shown in the loan statement balance. In addition, this quote provides information on how long it is valid.
When is a Payoff Quote Used?
If a person wishes to pay a loan off early, a payoff quote is needed. The same holds when they want to refinance an existing loan. Creditors also use this quote when a person falls behind on payments. They need an accurate amount of what is owed before pursuing collection activity.
Why Might There Be Added Interest?
Interest may accrue every day. For instance, a person might make their loan payment and five days later pay off the loan in full, or so they believe.
Interest has accrued over the five days, however, and those owe those funds as well. This is one demonstration of why a loan statement balance and payoff quote often differ.
Using an Online Loan Calculator
A person might turn to an online loan payoff calculator to determine how much they owe. Again, they don’t take into account accrued interest and other fees. Consumer Portfolio Services must provide this information for the borrower to ensure the quote is accurate.
Requesting This Payoff Quote
To get a payoff quote, the borrower needs to contact the lender directly. They may find there is a form online they can use, or they can call or email the company and speak to a representative. The procedure differs by the lender, so it is best to speak to Consumer Portfolio Services directly to learn the process.
Some lenders will provide a verbal payoff quote, but this quote is not legally binding. Always request a written quote with a valid through date. This protects the borrower if any questions arise in the future.
Every borrower must understand the difference between a loan statement balance and a payoff quote. Many people don’t know there is a distinction between the two. They become frustrated when they believe a loan is paid in full and the lender contacts them for more money. By recognizing the loan statement balance and payoff amount frequently differ, a person can avoid this frustration and take the right steps to pay the loan in full.
