12 September, 2009
Those who have taken out a personal loan with a low rate may be hit by high payment protection insurance (PPI) costs.
According to research conducted by the Economic and Social Research Council Centre for Competition Policy, based at the University of East Anglia, although lenders are providing cheap personal loans, they are pushing up the premiums for PP.
Out of the 211 £5,000 personal loans that was researched, it was found that a typical repayment without PPI was £162.37 a month, compared to £186.75 with insurance included. This would total up to nearly £300 for a year.
Dr John Ashton, a UEA lecturer in banking and regulation said: "Consumers shop around on the loan rates, not loans and insurance.
And strong sales techniques meant those less confidence or knowledgeable were led to believe the insurance was normal."
Prof Robert Hudson, professor of finance at Newcastle University Business School, added: "In light of our findings it is important for customers to search a wide range of financial services providers before undertaking any financial commitments."
Dr Ashton added: "In future there will be much more emphasis on predominantly smaller independent providers and the market for PPI will decline."
Source:: http://www.onlyfinance.com |
