Personal Loans Payment Protection
If you have payment protection on any personal loans that you may have made, did you know that you could be paying upwards of £2000 on top of the original debt including the interest? Probably not because the lenders are playing a percentages game with you that includes giving you something in one hand and taking it back from the other, but only more.
Moneysupermarket has looked into the varying degrees of interest fees charged and what the charges for payment protection will add to your final payments and have come up with something that shouldn't really surprise us.
If you have search for a good deal with a low rate of interest to keep costs of your loan down and want some payment protection, your probably thinking all the covers will basically be the same so by having the lower interest rate you will be saving that little bit more on the loan. Well in some cases you couldn't be any more wrong, Moneysupermarket.com found that a good deal loan with a interest rate of 5.7% with payment protection, can cost more than a loan with a 6.7% interest rate with protection, all because the insurance is cheaper and no less of a cover than the other one.
What makes it worse, the industry it’s self has claimed that the it is selling is not worth what we are paying for it and is very often sold wrongly to customers, the fact they still sell a product to us, knowing that it is priced way and above of what it’s worth, really is quite galling.
It really all comes down to the fact that loan companies are dropping the rate of interest on its loans to attract new custom, this has been even more in evidence today as the HSBC bank has lowered its interest rate to 6.9% for personal loans of £7000 or over and with Barclay’s and Northern Rock having current personal loan rates of 5.7%, they will look to re-cooping the cash they are loosing in interest rates from somewhere else, namely payment protection insurance.
If you feel that payment protection insurance is needed for your personal loan that you are buying into, then it would be a good idea to search out a independent payment protection insurance, this could save you in the region of £1,700 over the period of 5 years of payments, as cover from an insurance firm such as Pay protect can cost you as little as £300.