A payoff letter provides instructions on how to pay off a loan with a lump sum before the loan term ends. Learn how payoff letters work.This is an example of a payoff letter used in a syndicated loan transaction. Create a Loan Payoff Letter online and download it as a PDF or Word document. Customize and print a blank Loan Payoff Letter for free. Use a standard business letter format with your name, contact information, and the date at the top. Creating a payoff letter is essential to any loan or mortgage repayment process. Our free templates and this guide can help you get started. A payoff letter provides instructions on how to pay off a loan with a lump sum before the loan term ends. Learn how payoff letters work.