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PPI Charges

When you are presented with the option of purchasing PPI insurance the first thing you may ask is what are the PPI charges involved. In the past, some salespeople where evasive regarding the costs of the cover and lenders were surprised, later, to discover they were paying far more than they anticipated. The good news is, if your lender did not fully explain the costs you could be entitled to reclaim PPI charges.

Different types of cover

The cost of PPI depends on the type of borrowing it is attached to. If, for example, you purchase PPI with a loan it is likely the insurance will be calculated as a percentage of that loan amount, usually between 13%-25%. On a £7,000 loan, therefore, you could pay in the region of £910 and £1,750 for cover. In contrast, credit card payment protection is levied on a monthly base. Credit card PPI charges are usually calculated based on the outstanding balance on the card and work out at approximately 79p per £100 outstanding. If, for example, you owe £7,000 on your credit card you could pay approximately £55.30 per month for the cover.

Low payout rates

In addition to the potentinally high costs of payment protection cover many people have expressed concerns regarding the low payout rates. In 2008 a survey by the Competition Commission revealed that just 15% of people who had tried to use their loan PPI policy were successful and for card PPI that figure was just 11%. Part of the reason for the low payout rates is the high number of exemptions attached to the cover. These are things that are not covered by a policy. If you do not feel your lender adequately explained your policy exemptions, you could make PPI claims and receive a PPI charges refund.

For help with your PPI reclaim contact Belmont Thornton either by calling 0207 471 2000 or completing our online claim form.

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