If you ever wondered what could possibly be the reason for the additional costs to your loan, then you probably haven’t heard of payment protection insurance. Sure, there could be other policies engraved with your loan. But none can be more intriguing and controversial than the one they call PPI.
In the UK, PPI has been banned from ever being sold. There is a reason for such, and it’s not just because of the money that it procures from the loaner. To answer precisely, look at the question surrounding the policy.
Obviously, what is PPI?
Remember those times when you could not pay for the installments of your loan on time? And for such instances, the usual reason you might have is that you don’t have enough money, right? PPI can be helpful in times that you fail to pay, but covering for different reasons. It cannot be avoided that people get into incidents that they do not have any real control of. And no matter how much they want to pay, they still can’t do it. The payment protection insurance covers an individual in the occurrence that he is incapable of paying due to unforeseen circumstances.
What are these Unforeseen Circumstances?
If you are ill, have an accident or lose your job and you have a payment protection insurance policy, it will pay off your loan or the minimum amount on your credit card for a set period of time.
And speaking of Time…
Payment protection policies usually only pay out for up to 12 months. When during that time that the installments are still incomplete and there are more to be paid for, then an additional policy will be needed to continue the payment. The individual can apply for another one provided that they pay for it once the individual is well.
So what’s the problem?
As you can see, there’s nothing wrong with the policy itself. The real cause for dismay lies on how it is sold to the loaning public. The UK has confirmed that more than of all its loaners have mis-sold claims on their loans, making for a massive amount of money on their part. PPI has been a scapegoat for most of the banks and loaning agencies as they cover up what the policy truly covers and when it can truly take its effect. Banks have, in the past, told their clients that they will not accept any loan applications if not guaranteed with a PPI to come in with the loan itself. In a worse sense, banks will not even tell their clients that the loans they applied for have the policies in the first place! And when time comes that they dont need it, the policy will be voided since they arent applicable for it even in the first place.
What has or can be done to Get Back Mis-sold Claims?
For the self-employed, retirees or even students who find their loans with PPI, there are ways where you can get back the money you lost. One is through claim letters sent directly to the bank you loaned the money. The problem though, is that these banks can be fast with how they reject your requests, saying that the reasons are invalid. Another is by pursuing the matter through the Financial Ombudsman Service.
Yes, it is hard to get a claim back. But with more effort, there will be other ways to get the money back.