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Loan Protection Payments

Lenders have been readily pushing loan protection on new loans because of the cover they will tell you it provides and they will gloss over important details whilst leading you to believe that your loan could be dependent upon purchasing cover. In fact, they leave off most of the important information when coercing you to purchase the cover among which is the high cost of loan protection payments. Of course they wouldn't want you to understand just how much this policy was going to cost you for fear that you would refuse to purchase it thereby reducing their profit to almost naught. If payment protection insurance, PPI, has been misrepresented or mis sold, UK consumers are entitled to file PPI claims for refunds of what that cover cost them.

How Much Are Loan Protection Payments?

The actual cost of payment protection insurance is quite variable as in some cases it costs around 13% of the amount being borrowed whilst other times it can cost as much as 56 to 60% the loan value. There doesn't appear to be much logic to the formula lenders use to assign cost except perhaps the borrower's credit score along with the type of loan being financed. The other factor that affects a loan protection payment is whether it is a onetime premium in question or variable monthly premiums as would be attached to revolving lines of credit (credit cards). To appreciate just how high these premiums are take a look at a mortgage loan for £150k with loan protection assessed at 25% of the loan value. The person borrowing £150k would actually be borrowing £187,500 because of the 25% added to the policy as a onetime premium and the loan protection payments would significantly affect the monthly repayments. This wide disparity between what the borrower thought they were paying and the amount they ended up paying was the reason for a significant number of PPI reclaim complaints.

Can I Stop Making Loan Protection Payments?

It isn't fair that lenders can add something as costly as payment protection to a loan without our knowledge or consent but we can't simply refuse to make loan protection payments. The unfortunate aspect is that those payments are tacked on to the monthly loan repayments and there is no way to separate them. The only way to stop making loan protection payments is to file a mis sold PPI claim with the lender. This would serve two purposes actually. If the lender approves your claim and owns up to the fact that his/her firm mis sold PPI then your loan would be recalculated without the cost of loan protection and you would be paying significantly lower amounts from there on out. In addition, you are entitled to a refund of loan protection payments that you made as a result of mis sold payment protection. There is one thing to be aware of however and that is the very real possibility the lender will deny your claim which would mean that it would need to be brought before the Financial Ombudsman Service for an appeals review.

The whole claims process can be extremely frustrating and time consuming which is why many people are coming to Belmont Thornton, Belmont Thornton. We can act on your behalf by filing a claim with the lender as well as being able to take your claim through appeals. Our knowledgeable claims team can answer any questions your may have and they can also help you get on the fast track to filing your claim. For complete details give us a call on 0207 471 2000.

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Belmont Thornton Limited is regulated by the Claims Management Regulator in respect of regulated claims management activities; our registration is recorded on the website number 18273

Belmont Thornton Limited is incorporated in England and Wales, Company number 6621233, whose head office at Unit B11, Kestrel Court, Harbour Road, Portishead, Bristol, BS20 7AN and registered office at Harwood House, 43 Harwood Road, London, SW6 4QP.

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