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Opting to take PPI has absolutely no
influence on whether or not your application is likely to be approved.
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Typically, around 60% of the premiums you
pay for PPI are passed back to the lender.
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Some loan lenders earn more from PPI
commissions than they do from interest payments.
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A ‘Super complaint’ about PPI was made by
Citizens Advice in September 2005 to the Office of Fair Trading, who
agreed to launch an investigation. The title of the Super complaint was
‘Protection Racket’.
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Many PPI policies have ‘wait periods’ –
which mean that no benefits are paid for a specified period after
sickness, unemployment or redundancy occurs. That period may be for 3
months, during which time the lender will expect you to maintain full
payments or come to an arrangement to pay less than the full sum due.
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Some people are not eligible for PPI
benefits. Claims can be rejected on the basis of age restrictions,
self-employment, pre-existing medical conditions, mental health problems
and disputes about medical conditions.
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The advertised APR for a loan or credit card
never includes the cost of PPI.
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Even using trusted brand suppliers provides
little comfort. A £12,000 loan repayable over 84 months from Marks and
Spencer costs over 27% more each month (£226.99 instead of £178.40 per
month without PPI). That’s over £4,000 more to repay over the term of
the loan. Yet the advertised APR is 6.4% no matter whether PPI is taken
or not.
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It is no longer legal for the PPI ‘opt in’
box to be pre-ticked or pre-filled.
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Consumers assume that PPI payments cut in
automatically on illness, redundancy or unemployment. It does not.
Failure to claim promptly on this assumption can lead to late payments
on credit files which can cause long term damage to your credit rating.
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