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. Check out the payoff instructions on the Payoff Statement. Interest is an amount you pay for the use of borrowed money. Some interest can be claimed as a deduction or as a credit. If you know you're not going to be able to keep up with your loan payments, you might be better off selling the car yourself and paying off the debt. Effective as previously announced in the corresponding Mortgagee Letter. Otherwise, you can use Table 1 to determine your qualified loan limit and deductible home mortgage interest.