I need payment protection which I can afford
THE SUNDAY TELEGRAPH - 19TH JUNE 2005
“I am 18 and I wish to take out a £4,500 loan to purchase a car. Several lenders have offered to give me a loan, but want me to take out payment protection insurance.
As a travel industry administrator earning £15,000 and living with my parents. I think payment protection sounds like a good idea. I could not afford the repayments if I was unable to work. However, I am told the premiums would be more than £40 a month on top of the £150 loan repayments.
Can I get cover at a more reasonable cost and if so from whom?”
P Gosling
Braintree, Essex
There has been much criticism in the press of the extortionate cost of taking out payment protection insurance through lenders, and your experience provides an excellent example of just how much you can end up paying for this type of insurance.
When shown your query, Graham Trudgill, the technical services manager of the British Insurance Brokers’ Association said: “Many lenders will insist you take out loan protection insurance, but they cannot insist that you take it our through them.
He suggests that anyone seeking loan protection insurance should visit the official BIBA British Protection website rather than accept a quote from the lender.
For instance, he says: “BIBA has a loan protection insurance policy with Burgesses (an insurer) which could cost you as little as £9.30 a month based on a £4,500 loan to be repaid over three years.”
For monthly repayments of £375 over one year, the monthly premiums would be £28.13 or £15 on monthly repayments of £200.
