Anyone that has ever taken out a loan, credit card, or other form of finance has probably been asked about taking out PPI or Payment Protection Insurance. PPI is a form of cover that is designed to cover repayments on the debt for a specified period of time in the event that the policyholder cannot make repayments due to not being able to work because of sickness, accident, or redundancy.
Whilst PPI can offer peace of mind to some borrowers, it is not suitable for some people. It can also be very costly and some people may prefer to take their chances and go unprotected rather than pay the high prices linked to PPI.
However, PPI has not stayed out of the financial headlines for very long over the past couple of years, because regulators and campaigners have found that many consumers are being mis-sold this type of cover. It is important to remember that this type of cover will not suit everyone.
You should also remember that PPI is not an essential requirement, but is optional based on your own preferences. Some lenders have been known to tell borrowers that they cannot get the finance they want unless they also take out PPI.
If you do decide to take out PPI you do not have to take it from the provider through which you are taking the loan or finance, which some may try to make out. You can in fact shop around and find the best deal from another provider.
In the past some lenders were adding PPI to the finance without the consumer’s knowledge, which meant that the consumer was paying more for their borrowing and was not given the choice to reduce payments by opting out of PPI.
You should therefore always check and make sure that PPI has not been automatically added to any quote or finance that you receive.
