Payment Protection Insurance

[Andrea1967]

Hi, Does anyone out there know how this stuff works? I took out a loan with Northern Rock and somehow got coerced into taking out this insurance. (I kind of felt they were saying I would be a high risk person without it) and I desperately needed the loan.

I understand that it is possible to find cheaper alternatives of PPI elsewhere. I am sure it is not a requirement to have it (but its hard to argue that especially when you desperately want the loan) but is it something that the loan companies can use against you when applying the interest rate to your loan? ie if you don't take it they can consider you a higher risk so you get a higher rate.

I remember the letter coming through in which I was asked to confirm my purchase of the PPI and it was worded in such a way (along the lines, if you do not wish to purchase PPI we can requote your loan without the PPI) that I took it to mean (possibly mistakenly) that I would be reapplying for a loan again.

Is it possible to cancel the PPI on a loan without it affecting my loan agreement? The amount I am paying back is almost double what I borrowed with the PPI and I really could do without it.

[bram stoker]

Have you called and asked them to cancel it? I'm sure you can. I cancelled my moblie phone insurance and there were no other effect than my bill being reduced. It should be a separate contract, but call and check. No harm in asking.

[Andrea1967]

I suppose you're right. I could try that. I think I am getting tied up in knots about it because I am quite sure (that due to the commissions they get) they will question me about it (ie what would you do if you were ill etc etc).

Apparently, they sell it quite hard (and often incorrectly to people who would likely never meet the criteria to claim) because as I read somewhere, that along with the commissions and sales targets, it is effectively us paying to insure them!

But you are right. I will get the papers out and make the first approach. If I don't ask the question I'll never know will I?

Thanks for the push. x

[bram stoker]

I always tell sales people my partner deals with all the insurance and he told me I don't need it. Cop out, but it works. You could say your hub / partner has said you have to cancel it.

[Andrea1967]

I know why you cancelled your phone insurance!!! lol

They know from my records I am no longer married though. However, I will say I have taken advice, financial adviser.

Thanks again. I'll post as to how I've gone on but I reckon it will be after the bank holiday before I call them.

[dw190]

Originally Posted by Andrea1967

I know why you cancelled your phone insurance!!! lol

They know from my records I am no longer married though. However, I will say I have taken advice, financial adviser.

Thanks again. I'll post as to how I've gone on but I reckon it will be after the bank holiday before I call them.

You dont need an excuse to cancel PPI.

Put it in writing to them then they must cancel on receipt unless the terms require some notice which I doubt would be more than 1 month.

[specialkuk]

You can take the loan out and then you can cancel the payment protection at a later date. Loan companies make huge amounts of cash through payment protection so they do offer you a lower apr with the protection. But my advice is to find out the address that you need to write to, it will always be an address as they want to make it as hard as possible to do it. There are then many companies on the internet that will give you independant payment protection at a fraction of the cost. I reduced mine from £60 down to £6. So its definatly worth checking out.

[Andrea1967]

Thanks for that to DW190. Very helpful.

SpecialKUK - Thank you too. So it would seem my assumption was right when they said they would requote my loan without the insurance, in that it would affect the interest rate. However, I wonder am I safe in assuming that a higher apr is likely to still work out cheaper than paying for the insurance.

My mind has gone vague I either took the loan out last September or September 2004. Will have to dig out the paperwork. Either way, from what you are saying cancelling it will not affect the loan now?? It almost seems like I am tricking them into giving me a cheaper rate. I can't believe they would let us get away with that so easily.

Either way, I am going to write to them and cancel it.

Cheers again.

[specialkuk]

The payment protection is a separate service, but is normal sold within a package. I know for a fact the way egg work is they offer you a package always with the payment protection included. Once you take out the loan all you do is write to the address and get the payment protection cancelled.

I hate payment protection as two of my credit cards have had it on for years while i was very bad with my credit and i have worked out i have payed thousands.

Sometimes when you sign up to the loan you get a sepparate letter from the payment protection company with something like,'you have 7 days to write and cancel payment protection plan before it starts' try and do this if you can.

Thanks

[HONESTKNOB]

I'm fighting welcome car finance about this as we speak.
They put payment protection and shortfall insurance onto my policy when I didn't want it.
I rang to cancel it and they said they needed it in writing, put it in writing and rang up a few days later to confirm it had been cancelled but they'd 'lost' the letter, sent another by recorded delivery and now they are refusing to reduce my payments, keeping them the same as with the insurances but over a shorter period.
I have been to The Office of Fair Trading about them refusing to lower the monthly payments and they advised me to take it to Welcome's complaints department first of all, which I did.
Today I received a bog standard letter saying they had noted my concerns and had passed it onto my local branch!!!!!!! Who are the ones who told me they wouldn't lower the payment in the first place.
I gave them 14 days to reply then it's back to the OFT.

[b4rt0]

I sent of five letters yesterday by recorded del. to MBNA (2 x; loan and CC), Monument (used to be Providian), NatWest and Morgan Stanley (all CC).

The whole amount of the PPI is around 4K, the problem could be that I canceled all of the CC ones in feb and Aug 2004......but I was never given/offered a refund, nor did I know about it. Til now that is
The loan still has the PPI attached to it which off course I am cancelling.....

I rang the onbudsman on this and they said that it shouldn't be a problem......
Prolly going to be a bitter fight..............

[Butterbean]

I've just called my bank to talk about cancelling the LPI on my loan. They've said I can't cancel it (as you guys have said) and that I'll need to refinance the loan, so they are sending me the current status of the loan first and then I'll go through the process of arranging the loan again.

They did seem to be very reluctant, but I was gently persistent and used the argument that I'm trying to reduce my monthly outgoings as much as possible, and that it doesn't make sense for me to paying nearly £15 a month in loan insurance when I could reduce it to under £3 with the same protection.

Thank goodness for this site and thank you to all you wonderful people who tell it like it is. I've learned so much and have realised that I take the word of financial institutions rather than shop around - because I always felt they were reputable and reliable. *blush!* AHEM!!! cough! cough! It's OK. I've learned my lesson now and I promise not to do it again