Using A PPI Calculator To Determine Premiums
There are times in life when loans seem like the best possible option, if not the only option. There’s nothing wrong with this. Everyone takes out a loan from time to time. Unfortunately, there are some lenders who will use this an opportunity to take advantage of a person in need. This is something that has occurred for as long as financial institutions have been offering loans.
There are a lot of ways a lender can try to take advantage of the borrower. This isn’t to say that every lender is out to take your money, but rather that you should be aware of the potential dangers and make smart, safe decisions. They may try to spike interest rates, include hidden fees, and use clever wording in their contracts to get out of certain obligations.
What Is Payment Protection Insurance?
One other unfortunate outcome of taking out a loan is that you won’t be able to repay the loan on time. This happens to the best of us, even when we try our hardest to manage our available finances and make our payments on time. Whether it’s because of financial emergencies or medical emergencies, funds can quickly become depleted and repaying a loan may not seem like the most important use of limited funds.
Payment Protection Insurance (PPI) is a type of service offered by most lenders that protects you in cases such as those above. It’s an insurance policy intended to protect you and your loan in case of an emergency that prohibits you from making payments temporarily. During that time, the PPI insurance will make the payments and everything should continue as normal.
In an ideal world, this would be the end of the story, but as mentioned, some lenders are just out to take advantage of their clients. They will try to back out of their obligations for one reason or another and you’ll need to open a PPI claim. They often try to weasel out of the deal by stating the premium paid isn’t enough to cover the claim. That is why you need to utilize a PPI calculator beforehand to know just how much you’ll need to pay total.
Using A PPI Calculator
A PPI calculator is a very simple tool that shows you a very close estimate of how much you’ll need to pay in premiums to protect your loan. PPI premiums aren’t very expensive because not everyone can afford expensive premiums on top of repaying a large loan. However, there are a few different factors that will make a difference in the overall payment structure and a good PPI calculator will take these factors into consideration when calculating your premium.
The size, origin, and duration of the loan all make a difference. PPI protection is only available for home and personal loans, so if you’re working with a business loan it’s not an option at the moment. The age of the borrower and whether there is more than one also impacts the price.
Always Use A PPI Claims Calculator
You should always use a PPI calculator before entering into any agreement with a lender. Use the calculator to get a rough estimate of the premium and then compare it to what you’re seeing from the lender. If the numbers aren’t close, then they could be trying to pull the wool over your eyes. Ask them about the premium and how they came to their number.