Personal loan users alerted to possibility of 1500 GBP savings

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Mon, 29 Jan 2007

Personal loan users could save approximately Ł1,500 by reviewing their existing payment protection insurance deal, it has been claimed.

Payment protection insurance is designed to provide financial assistance to people who may be unable to meet their regular payment obligations, such as mortgage repayments or credit card debts.

And some personal loans automatically come with payment protection cover included.

However, the Post Office has pointed out that a number of insurance brokers charge the premium up front and insist that debtors pay interest on the total amount, meaning that they could be paying more than is absolutely necessary.

To support its claim, the British postal service suggests that a person paying back a personal loan of Ł7,500 over a five-year period could save Ł1,500 by cancelling their payment insurance deal but keeping the personal loan.

This money could then be used to find a more cost-effective standalone payment protection insurance quote.

Commenting, Claire Oldstein, head of communications at the Post Office, said: "The refund could be substantial, so people shouldn't miss out.

"Banks and loan providers are in an ideal position to sell insurance with their loans but customers should challenge them to fund what the true cost of their payment protection is."

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