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Banks Payment Protection

With the world in economic uncertainty banks are constantly safeguarding their operations by minimizing risk and choosing to deal with borrowers that have exceptional credit. However, some lenders make exceptions for subprime borrowers, under the conditions that the interest rates are higher. Some borrowers may leap at the chance of being given credit, but should be aware of any hidden charges in the loan. One of the most common hidden charges often added on to a business loan, mortgage loan, or credit card bill is payment protection insurance (PPI). PPI is a type of policy that offers to make repayments on a loan or credit card when a borrower is unable to work or make repayments due to unforeseen circumstances. However, a very small percentage of PPI claims are actually honored with some surveys putting the figure at just 15% for loan PPI.

Canceling PPI Policies

Canceling a PPI policy is as simple as contacting the lender, inquiring about the purpose of the policy, and then requesting that it be terminated. However, if you've already become victim to a situation that requires you to file a PPI claim, it is unlikely that you will receive benefits from the policy. Instead, you'll need to seek monetary compensation for all of the payments you've made towards the banks payment protection policy. The cost of a PPI policy for a mortgage loan typically ranges from 13-25%, which means payment protection on a £200,000 mortgage may cost between £26,000 and £52,000. This would be the amount you may be entitled to PPI reclaim.

Understanding Banks and PPI Policies

Given the fact thatin the past PPI policies were sometimes automatically bundled into monthly loan repayment costs, it may seem as if the PPI policy is actually an integrated part of the banks payment protection system. In fact, the bank, financial institution, or lender responsible for mis-selling the PPI policy is actually receiving a commission from a third-party insurance company for each policy sold. As more consumers become knowledgeable, fewer borrowers are enrolling in their banks payment protection policies, and some are even filing claims against financial institutions that charged them for a policy for which they were ineligible, or unaware of.

How to Avoid Your Banks Payment Protection Policy

One of the reasons why a banks payment protection policy is so difficult to avoid is that it is often referred to by various terms, including but not limited to loan coverage and repayment insurance. In fact, many banks will choose their own term for this type of policy, often using phrases that make it sound more important or necessary, such as loan protection. Sadly, PPI policies offer very little protection in regards to providing coverage for repayments, as most borrowers are ineligible for benefits. The easiest way to avoid your banks payment protection policy is to be upfront about it and inquire about any possible hidden charges or similar included policies before applying for a loan.


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