I am taking out a personal loan over 3 years, and have been offered payment protection which will cost almst £50 per month. I am in a very secure job (virtually no risk of redundancy) with good conditions for sick pay. Would it still be foolish to refuse the payment protection, even though I could be putting the extra money into my savings instead?
2007-02-16 00:03:34 · 22 answers · asked by chocolate_jump 1 in Business & Finance ➔ Credit
Yeah it's a waste of money
2007-02-16 00:06:46 · answer #1 · answered by Sir Sidney Snot 6 · 2⤊ 0⤋
As with most people, I agree, don't go for it, I am afraid the last person who said go for them is indeed in the minority.
This insurance is the same as any form of insurance, it is just a means of reducing risk should something go wrong. But with an insecured loan there is no real assett to lose, just some form of debt that may build up and can be negotiated down.
If you go to Martin Lewis's website given below he explains the point in many cases of not having insurance, from mobile phone to full home contents, it is all about risk management and you view of risk.
Why pay £10 a month to insure your phone when if you lose it you can buy a new one for less than a years insurance or just wait till your next renewal? Or why insure a low value car fully comp if it cost you £200 more? etc.
The two final things that may make you decide are below; two examples of people I know;
1. One friend is in financial difficulty through not working and has gone to the citizens advice bureau and negotiated to pay his debts back at £1 a week. That should cover you a bit. Before going that far, just talk to the bank and they will help you.
2. Another friend took payment protection on his graduate loan from one of the big 4 banks and was made redundant. They refused to cover the loan and continued to charge him for it quoting something in the small print, some get out they had put in there.
Not only did they do that, when he went back to work he tried to cancel the payment protection as it wasn't obvious worth the paper it was written on but oh, no the contract was binding then.
Lesson, banks are not nice! And do as much as you can to not give them any money. It is a war and treat it as such with them.
2007-02-16 01:45:23 · answer #2 · answered by Anonymous · 1⤊ 0⤋
In my experience I haven't taken ppp out. I am not in a secure job as keep leaving to have children and even though my income is never secure I always make the payments. It is entirely up to you. Do you have a critical life insurance policy? If yes, then this should cover the debt, but again, I am reluctant to advise you. One never knows what might happen. If your loan is huge and you feel that it is the right thing to do then take it. I'm umming and arhing here, but at the end of the day it has to be for your peace of mind. Do you have a partner? If he/she knows, then what do they think? If you don't take out the ppp and the worst happens would they support you until you were back on your feet? On another note, if you intend to put the £50 into savings and not use it, then this might be a nice fallback, but again, it all depends on the situation that you might/might not find yourself in.
Good luck with whatever you decide and take care.
2007-02-16 00:12:46 · answer #3 · answered by Awl 2 · 0⤊ 0⤋
Payment protection is a rip off in my opinon.... if your circumstances are secure and there is no risk of you losing your income to service the loan.
Perhaps its got some benefit to those who don't know about the certainty of their employment... but they are probably the least likely to be able to afford the extra insurance protection money each month lol. Catch 22.
You have to ask yourself... can I service this loan... and weigh up all the risks.
To me though... £50 x 12 months = £600.
£600 x 3 years = £1,800
Thats a hefty chunk on top of your borrowing (interest and capital repayments) that you would be paying back. Personally I'd prefer that money in my savings account... its a lot of money... how many hours would you need to work to make £1,800 clear after tax... quite a few..... why add it to the billions in profits some of the high street banks make annually.
However none of this is financial advice... if in doubt contact a qualified independant financial advisor/ .
2007-02-16 00:12:36 · answer #4 · answered by Joe Bloggs 4 · 0⤊ 0⤋
Have you ever had difficulties in the past paying other loans? If the answer is no then don't take it, esp if only over 3 years.
Its just extra income for the lenders because they are forced to be competitive on the lending rates.
I changed credit cards because i got fed up paying payment protection ,even though I had it set up to pay by direct debit, its a rip off, and probably next to impossible to claim against anyway
2007-02-16 00:13:33 · answer #5 · answered by Christine 6 · 0⤊ 0⤋
I'd say yes without a doubt. Even though you mentioned your job is secure, how well will it cover you if you had a serious accident which left you unable to work? If this cover is adequate then you should be ok, if not I would seriously look at it.
The whole idea with PPI is that if something, besides losing your job that is, happens, you dont have to dip into your short-term savings to pay for the loan. The insurance will kick in.
2007-02-16 00:40:59 · answer #6 · answered by trev_erwin 1 · 0⤊ 0⤋
don´t bother with the protection, even if you are fired made redundant the loan is unsecured so you won´t loose your house if the worst comes to the worst, inform the bank immediately that you intend to pay, but your circumstances don´t allow they won´t then send the bailiffs round to take all your possesions, besides if you put the 50quid a month into savings then you can use that to help pay off the loan for a couple of months while you find a new job.
2007-02-16 00:09:30 · answer #7 · answered by hardcore_pawn 3 · 2⤊ 0⤋
I think you already know the answer dont you. Save the £50 per month and if you dont need to claim you can pay the loan off faster therefore reducing your interest payment.
2007-02-16 06:11:06 · answer #8 · answered by juliaearnshaw 1 · 0⤊ 0⤋
You are not going to get an unsecured loan with bad credit. It is not going to happen. If anyone makes you a loan they are going to require some sort of collateral. If you cannot find the collateral they are not going to make you a loan.
2016-05-24 06:26:46 · answer #9 · answered by ? 4 · 0⤊ 0⤋
Do you know what are the consequences are, should you be unable to meet your repayments? How likely is it that one of the claim events will happen, leading to your being unable to pay? How severely will the action taken against you in the event of default impact you?
If you assess the risk this way, it will help you decide whether it is worth having or not having the protection.
2007-02-16 00:15:03 · answer #10 · answered by Denzel 4 · 0⤊ 0⤋
Nasty Ts & Cs. You might ask if they have a cheaper option. Barclaycard hammer you £46 a month for card protection if you get the full insurance but only three and a half quid for the more sensible option. Alternatively get a savings account or separate insurance policy from somebody else.
2007-02-16 00:09:51 · answer #11 · answered by Del Piero 10 7 · 1⤊ 0⤋