Tag Archives: banks
Loan cover watch out for Payment Protection Sharks
The Financial Services Authority (FSA) has been investigating the way Payment Protection Insurance is being sold by loan providers which include some of the UK’s biggest banks and building societies. And it’s big business. Sales of PPI as it’s called, earn lenders more than £1billion a year.
PPI is designed to protect borrowers by paying monthly loan repayment in the event that the borrower becomes unemployed or unable to work though accident or illness. Many lenders sell the insurance alongside the loan with around 50% of customers agreeing to the insurance.
However, according to the Department of Trade & Industry, only 4% claim and of these claims 25% are rejected. This may be partially explained by the FSA’s investigation which found that around half of the lenders surveyed failed to explain the details and exclusions to customers or make sure the insurance was suitable for the clients. Whilst the investigation reportedly does not find that lenders are compulsorily selling the insurance, it was frequently automatically added to loan quotations without it being disclosed that the insurance was, in fact, optional.
Even worse, some lenders are failing to point out to borrowers that the cost of the insurance for the full period of the loan, was being added as a lump sum at the outset rather than being paid as a monthly premium. This means that the borrower cannot cancel the insurance without redeeming the entire loan and renegotiating a new loan.
And hey, some of these lenders certainly know how to charge for PPI. According to Simon Burgess, Managing Director of British Insurance Ltd, one of the big high street banks typically charge £30 per £100 of loan insured. This, he says, compares with between £4 and £6 if bought separately on the internet. This view is supported by price comparison service uSwitch which says taking out PPI with banks can increase the amount you pay for cover by nearly 500%.
Take an example. Last year a high street bank was charging £5,150 for PPI to cover a loan of £16,000. The cost of PPI was then added to the loan making £21,150 as the total capital repayable and interest charged on the lot. This meant that of the £300 monthly repayment, about £70 represented the cost of the insurance. Equivalent insurance can be bought on the Internet for around £20 per month and cancellable at any time without penalty.
So what are the lessons?
If your lender offers you PPI cover ask for the monthly premium with and without PPI. That way you can see the true cost of PPI.
Find out whether PPI is added to the loan as an initial lump sum. If it is back off!
Shop around for competitive quotes. A search on the Internet for Payment Protection Insurance or Income Protection Insurance will find you lots of web sites to try.
Check out the conditions on the insurance. Particularly check out the exclusions which invalidate a claim. For example, some policies stipulate that you must have been working continuously for 6 months prior to a claim for a minimum of 20 hours a week. Seasonal or temporary work is usually excluded. When you take the insurance out you must be in good health and know of no impending disability and not be aware that you could become unemployed. Could these exclusions apply to you? If so, the insurance will be of no use to you.
Please don’t waste your money. PPI insurance is a good idea so long as it is cheap and on a monthly cancellable contract. After all your circumstances may change. Then check the policy’s exclusions to make sure that the insurance is valid for your personal circumstances.
Instant Approval Credit Cards: The Advantage of Applying Online
Getting instant approval for a credit card and sometimes getting immediate access to use it can now be done in less than 60 seconds. No muss, no fuss like the old days when getting a credit card took a month or more. If you werent aware of how instant your approval could be, now is the time to find out.
Internet Technology and Security Behind the Scenes of Instant Approval
How did the instant approval credit card come about? The answer is that the Internet has completely changed the way card-issuing banks can research consumer information and make a decision about an applicants credit worthiness. Nearly every major financial institution that issues credit cards including Chase, CitiBank, American Express, HSBC, and others now allows you to use the Internet to fill out their application online with complete security, submit it with the click of a button, and then count the seconds while they make their decision. And in most cases, if your credit is good to excellent, you will be approved instantly and a credit card will be on its way to you within days.
Behind the scenes, instant approval credit cards use the speed of the Internet and the sophisticated communication networks created for the banking industry. When you submit your application, banks can now easily verify your identity and check with one or more of the three national credit bureaus Experian, Equifax, and Trans Union to ensure that your FICO score meets their application criteria. (Your FICO score is a mathematical calculation performed by each of the credit bureaus that rates your credit history on a scale of 0 to 800.)
The Benefits of Instant Approval
If youre wondering why you might want to take advantage of this instant approval service to get your next credit card, there are several good reasons:
1. Many banks periodically offer special promotions on their credit cards, such as 0% APR on purchases and/or balance transfers for a specified period of time or bonus travel miles on airlines. These are offers you may not hear about if you dont browse the Internet looking for instant approval credit cards.
2. There can be a value in knowing quickly if you will be approved for a credit card if you find yourself needing additional credit for your business or personal needs. Using paper applications and the US mail will usually take 4 to 6 weeks before you know if you are approved.
3. You can sometimes get immediate access to a portion of the credit line for which a bank approves you. For example, some banks will offer you $300 to $500 that you can tap into immediately using a code they give you.
4. Applying for a credit card using a secure Internet site can actually be safer than filling out a paper application with your personal information and mailing it. Secure Internet sites use 128-bit encryption which is considered unbreakable in the computer security field. (You can tell when you are at a secure Internet site because your web browser contains a small icon that looks like a lock down at the bottom of the page.)
A Sensible Advantage
So the next time you are pondering your credit card needs and feel that you can benefit from a new credit card, consider looking into an instant approval card. In todays fast-paced world, you may agree that this new form of getting a credit card makes a great deal of sense for consumers.