With many loans you will find what is known as Single Premium Payment Protection Insurance. These types of policy can add hundreds if not thousands of extra pounds on to the amount you borrow from your lender.
A single premium policy is one where the premium for the insurance is paid to the insurer as a lump sum at the start of a loan agreement. In order to make that payment to the insurer, the bank loan you the money to pay that premium and add it to your requested loan amount.
For example, you approach the bank for a loan of £5,000. The bank tells you that there will be a PPI premium in the sum of £1000 and they lend you that money as well. So all of a sudden your total loan with the bank is not just the £5,000 you wanted but it has increased by £1000 to cover the PPI premium. So your loan agreement with them is now £6,000. As well as incurring extra debt to take the insurance your bank will also charge interest on the premium as well as the amount you borrow.
Most single premium policies only cover you for five years. So even if the term of your loan is set to run for 20 years you are only covered for the first five, however you will be paying for the insurance throughout the entire term of the loan.
If you have had PPI on one of your loans then you could be entitled to claim, for more information call us today on 0151 735 1000
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