Some lenders still acting shamefully with PPI
Over recent months payment protection insurance, or PPI, has been at the centre of controversy.
Regulators found that it was often being pushed onto people, mis-sold, not explained to borrowers, and sold to those that it could not even benefit in some cases.
However, despite all of the controversy over the suitability, sale, and effectiveness of payment protection insurance there are a number of lenders that are cashing in on this type of cover by hiking up the cost of this insurance by a considerable amount.
Payment protection insurance is sold to those that take out finance such as credit cards or loans, and is supposed to protect the borrower in the event that he or she finds themselves in a situation where they are unable to keep up with repayments.
In a bid to try and make the most out of these already expensive policies, some lenders have added massive increases to the cost of PPI, which means that those that do want the protection of cover will now have to pay through the nose.
Research was carried out by Moneyfacts based on a loan for £5000 over a period of three years. The research found that Lloyds TSB was the most expensive provider of PPI, hiking its rates for cover up by £7.65 per month to £28.77. Direct Line was also found to have hikes up the cost of cover, which has rocketed from £14.12 a month last summer to £24.50 per month when the research was carried out.
A Moneyfacts spokesman stated: 'The increases we have seen are significant. The banks might have been expected to reduce the cost of this insurance given the negative attention it has received, but apparently not. The cheapest cover for a £5k loan over 36 months still remains around £14, and the most expensive at £35. This means by choosing a loan with the most expensive PPI could cost you as much as £756 more over the three year term. Not only does the price vary, so does the level and type of cover provided, with differing terms, qualifying periods and conditions included.'
Tom Smith
9th July 2007
More Information:
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