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Finance
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Loans- Payment Protection Insurance
What is PPI?
Whenever you apply for a loan of any sort, you’re usually advised to take out Payment Protection Insurance (PPI). This insurance offers to protect us against unforeseen circumstances, usually unemployment or sickness. You have to pay an additional regular sum on top of the interest and loan figure. PPI claims to offer us piece of mind, but is it just one big rip off?
Mis-selling scandal
There has been a dramatic increase in negative press surrounding Payment Protection Insurance. One firm (the endowment specialists Brunel Franklin Ltd) states that as many as seven million people take out PPI each year. In most purchase agreements the PPI premium is already included, meaning that many of us are making unnecessary payments. These payments can vary greatly between lenders and in some cases can be as much as the interest itself.
Implications for Businesses
The majority of businesses take out loans through their banks. The lenders tend to offer PPI as a separate policy. In these cases PPI may be a good security if the business were to fall on hard times. On the other hand, it could be a huge burden on top of all the other running costs.
Pros and Cons
So while PPI may be useful in some situations, is it really necessary for every loan? You could end up paying an awful lot more than originally intended. But, if the worse did happen, you could be left wondering how to meet those loan re-payments. Whatever you decide, get a few quotes and read the small print carefully.
If you feel that you have been mis-sold an endowment, contact your local Citizens Advice Bureau for advice.
Fiona Seymour-Jesse
SJ Copy
Useful Links
Citizens Advice Bureau
http://www.citizensadvice.org.uk/
Articles
Brunel and Franklin
http://www.prnewswire.co.uk/cgi/news/release?id=181578
Motley Fool- Time to clean up this swindle!
http://www.fool.co.uk/news/your-money/insurance/2007/02/08/time-to-clean-up-this-swindle.aspx?source=ioowftxt0010011
Payment Protection Insurance Explained
http://www.abi.org.uk/Display/default.asp?Menu_ID=946&Menu_All=1,946,0&Child_ID=133
A Black Day for Payment Protection Insurance
http://www.insurance-business-review.com/article_feature.asp?guid=E5543B28-D89C-4E09-9152-8CDBA20EA520
The finance pages of Business in Berkshire are for general guidance only and advice should always be sought before acting on any of the suggestions made
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