Reclaim PPI On Personal Loans
Personal Loans remain one of the most profitable products as far as banks are concerned. So why is this?
Well, unlike mortgages where you only pay interest on the balance outstanding on any given day, on the vast majority of cases, the interest is front loaded and added to the borrowing from the outset. To explain, let’s say you borrowed £10,000 over five years and the interest rate was 5% flat. This would mean that you would pay £500 per annum in interest or £2,500 over the term of the loan. This amount would be added to the loan from the outset. In other words you would be borrowing £12,500 from day one. So, even though the flat rate of interest was 5%, the true rate of APR would likely be closer to double, at approximately 10%.
Figures over the years prove that only a relatively small portion of personal loans go full term, most are paid off and re-financed well before that. The problem for the consumer is that currently and much more so historically, that a loan repaid half way through its term, certainly doesn’t mean the balance in halved when you are given a settlement figure. It’s all to do with all the interest being added right at the very outset.
For a loan taken with PPI the news was even worse. The loan premium was added to the borrowing right at the start too, plus the interest on it as well. So what might have started off as a fairly palatable £10k loan with a flat rate of 5% over 5 years, had now grown arms and legs and could easily be hurtling towards a much harder to swallow, £17k.
But, the banks weren’t happy with a tidy little return like that, they had much bigger plans and this was where the poor consumer became a large chunk of meat in the lender’s sandwich. Let’s explain more, well first of all the banks had an aggressive policy of targeting loan holders, who in some cases may have only been a relatively short period of time into their loan borrowing, some banks this was certainly more aggressive. A fine (if that’s the word) example of this would have been Lloyds TSB, Bank of Scotland, Halifax and RBS. While at the Clydesdale and Yorkshire banks, they even had a defined procedure and name for this process – it was called Scott Lane, after the branch of the Yorkshire where it was devised.
Typically all the banks were guilty of quoting personal loan monthly repayments to include PPI and customers, who justifiably refused to take PPI with the borrowing, risked being grilled by the branch manager and even an area manager, until they could take no more and simply gave in.
So why the hard sell, well, these lump sum loan premiums were simply massive earners for all the banks, with commissions as high as 70% only one high street lender gave a pro-rata rebate if the borrowing was repaid early, with the others, most of the premium was eaten up by commission right from day one. Repay the loan early and you might only get the merest fraction of the premium back. So, if you were the banks’ best friend back in the day, now you absolutely know why!
At Beat the Banks we are experts on reclaiming mis-sold PPI on the whole range of personal loans sold by all the UK lenders. All out clams experts, were former bank lending managers and we always undertake full file checks from each and every lender to make sure you receive all the compensation that you are rightfully due back to December 1989. Remember too, for mis-sold PPI on bank loans, you don’t just get back the premium plus the interest, you also get back 8% simple interest for each year since the premium was paid and massive 15% on borrowing prior to April 1993.
To find out more you can call our team on 01382 200474 or for free on 0800 193 1234.