When a global pandemic swiftly changed the world in early 2020, many in the country suddenly found themselves without a steady income and facing financial insecurity. While cities shut down, storefronts closed their doors, and uncertainty swept the nation, millions of people were—and are—in desperate need of financial support for the months ahead.
Banks quickly saw the number of new loan applications soar as people sought out assistance to stay afloat. A recent study by Bankrate found that 38 percent of people applying for these personal loans intended to use the loan funds to pay off outstanding debt. With a limited income, debt consolidation loans became a practical solution for those looking for opportunities to save where they could.
With this economic uncertainty likely to remain for the near future, it continues to become increasingly important for banks and financial institutions to deliver the financial services that consumers need. Direct debt payoff takes immediate precedent.
How does direct debt payoff work?
While applying for direct debt consolidation, consumers are required to allocate a fixed percentage of their loan funds for direct debt payoff to their creditors. All qualified applicants are presented with a pre-approved loan offer with various rates and terms.
A consumer has to meet the minimum payoff amount in order to qualify for direct debt payoff to supported creditors. Unlike standard unsecured personal loans where funds are deposited directly into the consumer’s account to pay creditors themselves, direct debt payoff disburses funds to the consumer’s verified creditor accounts. Any remaining balance of the accepted loan offer is credited to the consumer’s bank account. They can then track the movement of their funds and payoff status for their debts.