Hi,

Last year I took out a loan with Northern Rock and along with the loan I took out their payment protection insurance. Once the paperwork came through I realised that work, as well as some other policies covered me for the money and therefore their policy wasn't required. On trying to cancel the policy though I was told that as the cheque had already been issued I would have to pay back the total sum (£32,000 - the loan was for £25,000) and then they would re-calculate my interest payments.

Obviously I was unable to payback £7,000 on top of the original loan as I had already paid some other loans off with the cash. However, it's now a year later and I'm beginning to think that this was slightly under hand of them. As far as I am aware the loan and the PPI are two seperate agreements?

Could someone please let me know if I'm entitled to cancel this policy without Northern Rock asking me to immediately pay back any outstanding sum. The monthly cost of the PPI is around the £90 per month mark and as I'm sure you appreciate, I'd rather be putting that money somewhere else.

Thanks in advance for your help and I look forward to any advice given.

Regards,

Ed

Ok. Im sure this is wrong. The reason I am sure is because my stupid dp took this kind of payment protection out with a small loan. It was a rediculous amount for something that we could afford to pay back even if we were both out of work.

I told him to go back to the bank immediately and get it cancelled. This he did, and what the bank (RBS) did was to take out a new loan, to pay back the old loan, thus not taking the PPI with the new loan. This should have been sorted striaght away for you, and no you shouldnt have been expected to pay back the loan plus insurance at that time! Was there an early repayment penalty or something? Thats the only reason I could think of as to why they would want the whole ammount - but even then....

Im sure someone will have good advice on here, as always, but just so you know, they ARE wrong. And it was their responsibility to sort it when you first asked. They are acting very shadily to state otherwise.

You can certainly cancel the PPI but as to whether you can claim, I think that one I will leave to others as I don't know.

Well that's the thing, I have no intention of claiming should anything happen as I'm covered by other policies. Yesterday I sent off a letter asking them to confirm my PPI premium and whther they adjusted my rate as a consequense of me taking out the policy with the loan. Currently they are offering a 20% discount of you take out a loan but I don't think this applied when my arrangement went through.

Looking at the papaerwork they make an extra £10,000 approx from this policy

The loan and the PPI are competely separate. Nothern Rock aren't an insurer themselves so the PPI must be underwritten by somebody else. Check your paperwork but you should have a 14 day cooling off period in which you can cancel the policy and get a refund of any premium paid to date. I know some companies really hard sell the PPI (they get massive commision) but it really isn't worth the paper it's written on (I know, I've worked in PPI Claims!) I can't think of any reason why you should have to pay back all this extra. Threaten their Chief Executive with FOS!

Agreed, these are 2 separate agreements & you should have a certificate of insurance for the PPI.

I've just redone loan with Barclays as to me the PPI is not worth the paper it's written as so many exclusions etc.

Check your paper work which may be on NR headed documentation as I suspect that they will arrange the PPI through a captive insurer.

There is absolutely no reason why you can't cancel this.

In addition, the PPI premium should not be part of the "loan" amount and should not attract interest. It is a monthly paid premium.

Technicaly the ppi is part of the loan amount as the ppi is not paid for up front so the money is loaned to pay for it (does that make sense)

And to quote the script that were now using. "the total cost of cover is added to the loan amont and incurrs intrest accordingly")

However you still should be able to cancel it they will proberly refund part of the cost into the loan , And they will alomost definatly make you confirm the request in writing.