Reports show that when the base rate stood at 5 percent, just seven months ago, personal loans were available at 6.9 percent, which was a margin of 1.65 percent. However, although the base interest rate is now just 0.5 percent the same loan charges interest of 8.5 percent, which means an astonishing 8 percent margin.

Personal loan rates are expected to settle at around 10 percent by the summer according to some officials, partly because of the ban on PPI that has been announced and is due to come into force. As a result on the ban of single premium payment protection insurance, lenders could lose a lot of revenue, and officials believe that hiking up rates and charges are amongst the ways in which they will try and recoup some of these losses.

One industry official said: ‘Rates are going up on a daily basis. It’s the lenders’ reaction to the severe restrictions being introduced by regulators on the way payment protection insurance is sold. Instead of making profits on the back of this expensive insurance, they are going back to basics and having to make money out of lending you money.’

Lenders may still advertise reasonable rates, which is known as the typical APR, and is supposed to be available to at least two thirds of applicants. However, another recent report has suggested that far fewer than two thirds are getting this typical APR, with most finding that they are being charged much more, which is something that regulators are now looking into.

PPI ban sees spike in loan rates is a post from: Glitec Loans

It is thought that a number of major High Street banks, including some of those that have been bailed out using taxpayer’s money, will find themselves towards the top of this list of financial institutions, and this includes Lloyds TSB, Northern Rock, and Barclays.

According to a recent report these banks are amongst those that have been found to have rejected customer complaints in relation to this type of insurance cover unfairly, and with the FOS having cracked down on PPI it is thought that these banks will be found to be in breach of regulations relating to PPI complaints.

The FOS is calling for customers to be treated fairly with regards to such complaints, which is something that these banks are failing to do. This will be the first time that the FOS will have named and shamed individual banks with regards to this issue.

One industry official said: ‘These banks are not dealing with complaints properly, failing to give them the time and consideration they deserve.’

Another said that his company had not yet lost any PPI mis-selling claims, stating: ‘Either the lender has conceded before a formal adjudication, or the FOS found in favour of the consumer. In my view, high rejection rates are a deliberate tactic by lenders to try to get consumers to give up their claim.’

Theresa Fritz from consumer campaign group Which? said she was not surprised by the recent findings. She stated: ‘The Ombudsman would not be upholding nine out of ten cases if complaints were being dealt with properly,’

Banks could be named and shamed over PPI complaints is a post from: Glitec Loans

Officials from the FOS have said that they are dealing with around eight hundred complaints every week in connection with loan related insurance in the UK, and that the number of complaints that were being upheld was unprecedented. The complaints are in relation to Payment Protection Insurance, or PPI, which is sold alongside loans, but sweeping changes are soon to be enforced with regards to the sale of this type of cover.

The PPI cover that is sold alongside loans is designed to cover the policyholder for repayments for a specified period of time in case they are unable to make repayments due to sickness, redundancy, or accident.

However, consumer campaigners and various other groups have long since criticised the cover because it is costly, has been widely mis-sold, and with single premium PPI is added to the loan, thus resulting in the policyholder also having to pay interest on the cover as well as on the loan itself.

A spokesperson for the FOS said: “It is still the single biggest source of complaint, amounting to about a third of the total. We are upholding about 90% of the cases we deal with, and with one firm 100% of the cases.”

According to officials there are often many restrictions with regards to policyholder’s claiming on the policy, and it is often being sold to people who can never make a claim on it anyway.

She added: “We are upholding an unprecedented number of consumer complaints about PPI. We have reported our concerns about some firms who seem to be systemically and deliberately mis-handling complaints.”

Increase in complaints about loan insurance is a post from: Glitec Loans

The Financial Services Authority has said that lenders will have to stop selling single premium PPI by the end of May.

The chief executives of companies that currently sell single premium PPI have been contacted by the Financial Services Authority, and have been informed that they must stop selling this costly cover by 29th May.

This came after the Competition Commission decided on a ban on the sale of this type of PPI following heated controversy and its own reviews. With single premium PPI the cost of the cover is added to the amount borrowed in a lump sum, and this means that the borrower ends up paying interest on the cost of the insurance as well as on the loan itself.

In the letter that was sent out to firms the FSA stated: ‘We therefore request that if your firm has not already done so, it stops selling single premium PPI with unsecured personal loans as soon as possible and in any event by 29 May 2009. In view of our ongoing concerns across the single premium market over the standard of sales, we believe this request is justified to bring an orderly withdrawal of single premium PPI from the market.’

PPI has been sold alongside credit and finance for many years, and this includes credit cards, loans, and car finance. It is designed to cover the repayments on the debt for a specified period of time in the event that the policyholder cannot make repayments due to sickness, injury, or redundancy.

Single premium PPI to be stopped soon is a post from: Glitec Loans

Once the ban on the sale of the cover has been put into place lenders will no longer be able to sell this cover alongside credit agreements. The Competition Commission has also reduced the amount of time that lenders must wait before contacting customers to see if they want the cover, from fourteen days to seven days.

As part of the rules consumers will be able to contact the lenders themselves within twenty four hours if they wish to take out the cover, which is designed to cover repayments on a debt for a specified period in the event that the borrower cannot make repayments due to sickness, injury, or redundancy. Single premium PPI sales will also be banned under the rules, and this is where the cost of the cover is taken as a lump sum and added to the loan, which means that the borrower has to pay interest on it.

However, the Association of British Insurers has expressed concern that the ban on PPI could cause problems for many borrowers, particularly given the current economic and financial climate, where many were concerned about losing their jobs. PPI has been under fire for some years after investigations revealed that it was being mis-sold in a number of ways, and often consumers were being forced into taking the cover or having it added to their credit without even being told.

One official from the Competition Commission said that the measures had been put into place to protect consumers. He said: ‘Consumers’ interests are not best served when the only choice the vast majority have is whether or not to purchase their credit provider’s PPI product. The resulting lack of competition means that the only offer consumers get is simply worse value than they are entitled to expect.’

PPI with loans to be banned is a post from: Glitec Loans

PPI came under fire because there was evidence that it was being mis-sold to the tune of billions of pounds, with m any people being sold the cover even though they were not eligible to ever claim on it, others having the cover added to their finance without their knowledge, and some people being told that they had to take the cover in order to get the finance that they wanted. PPI is designed to meet repayments on a debt in the event that the policyholder is unable to work and earn money due to sickness, injury, or redundancy.

However, despite the controversy over PPI many people may now be questioning whether now is the time to take out this type of cover, given the rising level of unemployment as struggling firms make huge cutbacks in staffing levels. With reports that giants such as RBS and BT have decided to cut back on the jobs of thousands of staff members it is understandable that many may be worried about how they will handle their debts in the event that they lost their jobs.

Industry officials have said that there has been a marked increase in enquiries about PPI over recent weeks, as worried workers try and assess their options in the event that they lose their jobs. Whilst the protection can prove valuable for many people, and can provide valuable peace of mind, experts have warned that there can be catches, which the consumer needs to look out for, and it does not come cheap.

Some have suggested that consumers look at stand alone income protection, which covers your income in the event that you are made redundant, and the cost of this cover can vary but can start at as little as £2 per month. It is normally a set fee per £100 of income insured, and policyholders could enjoy cover for twelve months in the event that they are made redundant.

One official said: ‘Rates vary widely, from as little as £2 a month to more than £5 per £100 guaranteed.’

He also warned: ‘Many accident, sickness and unemployment policies have a clause in the small print that allows the insurer to cancel the policy or raise rates with just 28 days’ notice. If there is a severe slump and insurers start paying out lots on unemployment claims, then some may pull the plug.’

Is now the time to take out PPI? is a post from: Glitec Loans

In the past trying to take out finance with any type of lender without being hounded relentlessly about taking out payment protection insurance was pretty much unheard of, but these days lenders and finance companies are far more careful about how they try and sell this cover. PPI is a costly form of cover, and for many people the cost added to the cost of the actual finance was not manageable. However, many lenders and finance companies have not paid any heed to affordability, but have been more interested in actually selling the policy.

The reason for this sudden caution from many lenders and finance companies these days is because of a clampdown from the financial regulator, the Financial Services Authority. For some time the FSA has been investigation the sale and effectiveness of PPI and came up with some rather worrying conclusions. Firstly, it emerged that many of the people that were being sold PPI – which is sold with all sorts of finance, such as credit cards, loans, catalogue accounts, etc – would not actually be able to claim on it because they would not have been eligible. For example, those that were self employed could not claim for redundancy. However, the FSA investigation found that the ins and outs of PPI were often never explained to the consumer.

It was also found that consumers were being misled with regards to PPI. Some lenders and firms were making out that the consumers would not get finance without taking PPI, which is not the case. Others made out that the PPI had to be taken through themselves, which again is not the case. Some even added PPI to the finance without the knowledge of the borrower, resulting in the borrower having to pay far more than was necessary for their borrowing because of insurance cover that they may not even have wanted.

Of course PPI can provide peace of mind for some people, but if you are thinking of taking out this sort of cover you should bear a few things in mind. Firstly make sure that you are eligible to claim under the terms of the policy. Also, remember that it is not compulsory and if you do want to take it out you can choose your own provider, so take the time to compare policies to find the best one for you. The FSA now has guidelines and assistance for those wishing to take out PPI on its website, so this could be a good starting point if you want to take out this cover.

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Should you consider payment protection insurance? is a post from: Glitec Loans

It is usually optional, however it is sometimes necessary to secure the loan such as a mortgage.

You should be aware that it is illegal for a lender to include credit insurance or other optional products into your loan without your knowledge or permission.

Credit insurance comes in four main types.

• Credit life insurance: which pays off some or all of your loan in the event of your death.
• Credit disability insurance: covers accidents, illness and other injuries that might mean you cannot work or pay back your loan.
• Involuntary unemployment insurance will make your payments if you lose your job due to no fault of your own, such as a layoff.
• Credit property insurance protects the property that is used to secure a loan in the case that it is lost or destroyed.

If you are considering taking up credit insurance, think first about your needs, shop around so you are aware of your options and consider the price of the insurance. Credit insurance can often turn out to be very expensive and the benefits relatively low.

For example, you may get a much better deal if you have life insurance or directly insure your property. Before agreeing to the optional extra insurance, you should consider:

• How much does it cost?
• Will it be added to your loan amount, in which case it will increase your monthly repayments.
• What other payment options are there, for example paying for it monthly instead of adding it to the loan.
• Does it cover the full amount of the loan and for the full length.
• How much lower would your loan repayments be without it.
• In what cases will it actually pay out and for how long. What are the exclusions and limits of your cover.
• Does the coverage become effective immediately.
• Can you cancel the insurance and is there a penalty for doing so.

Credit insurance is a very lucrative business for the companies that offer it and in many cases you will be paying for something you do not need. If you do not want credit insurance do not take it. In most cases the lender cannot deny you credit because you refuse optional insurance and they definitely can’t insist you buy it from them.

Do You Need Credit Insurance? is a post from: Glitec Loans

All types of loans offer this type of protection, from unsecured credit cards to secured loans such as mortgages. But what’s the real cost of this protection, and is it worth it? An estimated one billion pounds are spent on buyer protection insurance each year.

As the lending industry becomes more and more competitive, lenders are seeking ways to bring in more pounds to offset the lost revenue from lower interest rates. Offering various add-on sales is one way to do this, and buyer protection is one of those add-on services.

The fact is that buyer protection can cost the consumer almost as much as the cost of the interest, nearly doubling the cost of the loan. Therefore, consumers have to carefully weigh the costs against the protection and decide for themselves if the purchase is worth it.

In an unstable economy, such protection may be welcome and may afford the buyer peace of mind. This in itself can sometimes be worth the cost, but not always. Each program is different in what it covers and what the restrictions are, and buyers need to read the fine print to fully understand what types of situations are covered and in what circumstances.

It could be that the policy will not cover a layoff situation, or only covers unemployment after a certain period of time in which the applicant must demonstrate an active job search. In addition, as with other types of spending activities, it pays to shop around. The lender’s program may be much more expensive than an independent policy, and the coverage may be better. Researching options could save consumers money.

Of course, there’s always the option of not purchasing the buyer protection policy. If this sounds risky, consider that this type of protection is relatively new. It’s a gamble, of course, in that you never know if you’ll need it, much like insurance coverage.

It may be nice to know you have it, or you may decide it’s not worth the cost. Before signing on for such a program, be sure to read the fine print. The new loan laws are useful in this regard, but it’s still up to the consumer to be fully informed. Consumer protection agencies continue to receive complaints about information not being clear despite the government’s new policies.

Chances are, if you apply for a loan, you will be pressured into purchasing this type of protection.

Bear in mind that the person selling the policy may not know much more about it than you do. Lenders are also required to disclose all restrictions on such policies as well as the purported benefits, but this does not always happen. The bottom line is that the consumer is ultimately responsible for his or her financial situation and remaining informed.

Payment Protection Insurance: The True Cost is a post from: Glitec Loans

Moneysupermarket has looked into the varying degrees of interest fees charged and what the charges for payment protection will add to your final payments and have come up with something that shouldn’t really surprise us.

If you have search for a good deal with a low rate of interest to keep costs of your loan down and want some payment protection, your probably thinking all the covers will basically be the same so by having the lower interest rate you will be saving that little bit more on the loan. Well in some cases you couldn’t be any more wrong, Moneysupermarket.com found that a good deal loan with a interest rate of 5.7% with payment protection, can cost more than a loan with a 6.7% interest rate with protection, all because the insurance is cheaper and no less of a cover than the other one.

What makes it worse, the industry it’s self has claimed that the insurance protection it is selling is not worth what we are paying for it and is very often sold wrongly to customers, the fact they still sell a product to us, knowing that it is priced way and above of what it’s worth, really is quite galling.

It really all comes down to the fact that loan companies are dropping the rate of interest on its loans to attract new custom, this has been even more in evidence today as the HSBC bank has lowered its interest rate to 6.9% for personal loans of £7000 or over and with Barclay’s and Northern Rock having current personal loan rates of 5.7%, they will look to re-cooping the cash they are loosing in interest rates from somewhere else, namely payment protection insurance.

If you feel that payment protection insurance is needed for your personal loan that you are buying into, then it would be a good idea to search out a independent payment protection insurance, this could save you in the region of £1,700 over the period of 5 years of payments, as cover from an insurance firm such as Pay protect can cost you as little as £300.

Personal Loans Payment Protection is a post from: Glitec Loans