Payment Protection Inurance 101

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Personal Loans and Payday Loans - A PayDay Loan Online
Online payday loans can get you fast cash through a very quick process. By processing applications online and depositing money into your checking account through direct deposit, you can have your cash advance within hours.

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Applications are processed electronically for near instant approval. There is no credit check involved with the cash advance company, so a... Read loans article



Law Practice Finance
How do you finance a growing practice? It is impossible to have a successful practice without good cases and managing good cases to a successful conclusion requires money for working capital. So, how does a growing practice secure the working capital it needs?

Historically, growing practices in need of working capital have had limited financing alternatives. A law practice's largest and... Read loans article



Payment Protection Inurance 101
Payment Protection Insurance (PPI) is one of the favourite subjects of the financial press currently. Why is this? Well the answer is simple! It is because the sale of these insurance policies alongside products such as loans and credit cards is simply wrong. So wrong in fact that it couldn't any more wrong.

In a nutshell the economics of lending money, either via loans or credit cards simply do not work unless they sell enough PPI, yet the PPI product itself is very very expensive, and not always appropriate. The combination of these two factors means that as a product it is sold very badly - in fact many people take the product out without even knowing it!

How has this ridiculous situation arisen? First of all lets look at what PPI actually is. Basically it is an insurance policy that will make repayments on a loan for you should you lose your job, have an accident or are taken ill. It is sometimes also referred to as Accident, Sickness and Unemployment insurance or ASU.

In theory this is great but there are some catches. For instance there are some exclusions like self employed people, or pre-existing conditions. In many instances the level of cover is not that great, especially on credit cards where some products only pay the minimum amount on your card each month, sometimes as low as 2%. Also, as I have already said the policy is very expensive, especially for this level of cover, and the fact is that most of the cost is made up of commission which goes to the lender! This is money for nothing for them, as they do not carry any of the risk i.e. if you make a claim it is the underwriting insurance company that pays - not them!!

The reason is it so expensive is, and they rely so much on selling it is very straightforward. The loan market has got very very competitive which means that most companies who have a competitive product do not actually make any money from it, especially as so many people now repay loans early, and they have to sell PPI to make a decent return. In most cases they will make you pay the premium up front, add it to the loan and charge you interest on it! Amazing! More money for them!

PPI is also sold badly. Many lenders add it to the cost of the loan without the customer actually asking. Many ''suggest' that you will not get the most competitive rate unless you take the insurance, and with many consumers ignorant to their rights and what this means, they end up agreeing to it.

Additionally there is huge pressure on loan brokers to sell PPI. They get significantly higher commissions if they sell the products, so the broking world is equally dependent on this product.

Some of the secured lenders now offer a refund of premiums if you have made no claim within 5 years (some are 10!). This sound great but in reality very few people keep their loans that long.

The really bad thing is that for secured loans, if you do redeem the loan early, you still have to pay back the element that paid the premium, even though it was to cover a loan you have paid back! It really is that ridiculous and scandalous!

A number of steps need to be taken to fix this problem.

Firstly we need to see better, and stronger regulation around the sale of PPI. I am not fan of regulation for regulations sake but it is desperately needed.

Secondly I believe that lenders should be compelled to adjust their interest rates to show the cost of the loan including PPI. They will argue that PPI is a separate product but many consumers use the APR as a way of comparing loans - and this is impossible if you are taking out insurance.

Thirdly, and perhaps most controversially I believe lenders should be forced to offer a monthly premium PPI product as well as the single premium products they offer at the moment which is where they add it to the loan and charge you interest on it. What other forms of insurance require you to pay the whole lot upfront? None.

If you are looking for a loan, you should consider how you would deal with repayments should you lose your job or have an accident. You should consider insurance. However I would strongly recommend that you visit an insurance broker and take out a stand-alone ASU product. It will cost you much less than the product offered by the lender. Don't let the lender bully you into taking their product - it really really is appalling value.

This article was written by Nigel Bassett from myloanchoices. http://www.myloanchoices.co.uk/Secured-Homeowner-Loans.html

Nigel Bassett has spent 17 years working in financial services within the UK, covering many disciplines and product lines. In the last 5 years he has focused on online marketing and has been involved in a number of the leading personal finance websites.

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Cash Advance Check Loans - Online Or Offline

Online cash stores offer a variety of rates. More often than not, they are less expensive than offline stores. Of course there are companies that offer extremely high rates, but you can avoid them if you shop around. In fact, that is one of the biggest advantages to online stores - you can compare rates in minutes to find the lowest finance fees.

Fees To Look For

Most cash stores charge a flat fee rather than a percentage of your payday loan. Some online cash stores also charge an application fee. By shopping around you can find lenders who don't charge this. And some of these lenders will waive the fee for first time borrowers.

When you are comparing fees, you should look at the APR or annual percentage rate. This number is what the loan would cost if you carried it for an entire year. While most customers make their payment in less than a month, the APR allows you to make quick comparisons.

Watch Out For High Rates

Don't sign up for the first cash advance offer you get. Shop for rates first. You can do this by calling around, but an easier way is to look up rates on line. You can find the APR or fees either under ''Fees' or the ''FAQ' section. If you can't find numbers to compare, email the company.

You also want to pay attention to how long the loan fees are for and make sure you compare the same numbers. For instance, if you need a cash advance for 14 days, look at the finance fees for the 14 day period with each lender.

Understand Payment Plans

Another way lenders can take advantage of your situation is by delaying your payments. Lenders who only deduct the minimum payment rather than the total amount will charge you more in finance fees. Initially these lenders may have low rates, but by adding more time to your loan, you rack up finance charges.

If you choose to go with one of these lenders, make sure you set up a full payment on your payday. That way you will pay the minimum finance fees, keeping money in your pocket.

See our recommended sources for payday loan companies online, by visiting: Recommended Cash Advance Companies Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.


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Payment Protection Inurance 101
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