Lenders increase cost of payment protection insurance
THE SUNDAY EXPRESS - 24TH JUNE 2007
Lenders have raised the cost of payments insurance during the past 12 months, plunging cash-strapped borrowers into further debt.
A new report released this week exposed a number of high street lenders for upping the cost of payment protection insurance , which has already been branded "overpriced" by the Office of Fair Trading (OFT) and other consumer groups. Payment protection insurance pays out if a policyholder falls ill or is unable to work and can no longer afford loan, mortgage and credit card repayments.
The report, by Moneyfacts, claims Lloyds TSB, Direct Line, Alliance & Leicester and LV= have increased the cost of payment protection insurance since this time last year.
Direct Line is the worst offender, charging an extra £10.38 a month for a loan of £5,000 over three years. This equates to an extra £373.68 over the term of the loan. The same loan with Lloyds would cost an extra £275.40, compared with last year.
Michelle Slade at Moneyfacts.co.uk said: "Although the average cost of personal loan payment protection insurance has not changed, there have been some hefty changes in premiums.
"With payment protection insurance currently under the OFT microscope and being seen as 'overpriced and inflexible', you would have thought lenders would be reluctant to rock the boat further."
Borrowers are often not informed cover can be bought separately from independent providers.
Broker British Insurance offers cover for £4.90 for each £100 borrowed and there is no interest charged.
