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.To figure out how much is owed to completely pay off a loan, a borrower must request a formal loan payoff statement from their lender. A mortgage payoff letter can come in two forms. One form tells borrowers the remaining principal amount and interest they have to pay to close out the loan. With a few quick exercises, you can calculate your loan repayment timeline, make adjustments to your cash flow, and get out of debt faster! Do you need a loan payoff request form? To work out the annual instalment we need an annuity factor. 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.