Interest On PPI - Is It Legal?

davidp1948 · 20th March 2007, 18:34

Hi all, can anyone tell me the answer to this question - or where to look to get the answer?

When PPI is sold/mis-sold can the loan provider include interest on the insurance part of the transaction?

In other words can they show the capital sum + the insurance amount = the total loan amount and then add interest to show the total to be repaid before dividing by the number of months to create a monthly repayment figure?

In my example I am referring to a fixed term personal loan NOT a credit card agreement.

Thanks in anticipation

Regards
DP

reidnet · 20th March 2007, 22:59

That is normal practise if the policy is a single premium policy, Basically you are increasing the amount of your loan to cover the PPI and then you pay Interest on the total value.

It is a sneaky way of doing it as this actually hides the true cost you are paying for the PPI.

Frome Early 2005 this had to be shown in a different manner,

Eg, Loan Amount
Loan Interest

PPI cost
PPI Interest.

A new document I have just got hold off which I am in the process of looking into in more detail also states that If PPI is being Financed by Credit they have also to show a Cash Price of the Policy.

Ian

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