Signing up for payment protection insurance with a personal loan provider could increase the cost of the loan by 467 per cent, it has been revealed.
These findings by uSwitch.com once again highlight the issue of mis-selling of payment protection insurance policies, which was unveiled in an official report last week.
When taking out payment protection insurance from a personal loan provider when borrowing £10,000, the borrower could add as much as £3,000 to their personal loan repayments, uSwitch calculated.
Many personal loan borrowers wrongly believe that they will receive the best deal on insurance from their personal loan provider, comments Nick White, head of personal finance at uSwitch.
Others believe that if they take out payment protection insurance with their personal loan provider, they have a better chance of being approved for the personal loan.
But uSwitch warns that the annual percentage rate (APR) increases by up to 11 per cent when payment protection insurance is added to a personal loan.
"More worryingly for consumers is that the cost is sometimes added to the total amount borrowed and then interest is charged on both," warns Mr White.
The independent switching service is calling on personal loan providers to be more transparent when outlining the costs associated with taking payment protection insurance.
Personal loan borrowers warned over insurance
Thu, 10 Nov 2005
Recommended links
Compare Payment Protection Plans For Leading ProvidersBiba: Banks' personal loan insurance charges outrageous
Warnings against personal loan provider insurance
Debt insurance being 'mis-sold'
|
|
|
