Customers arranging a personal loan over the telephone or internet should watch out they’re not tricked into buying expensive payment protection insurance (PPI) at the same time, warns Which? Money.
When Which? Money searched for a loan it found more than half the quotes received by telephone (24 out of 41 calls) automatically included PPI.
A number of lenders quoted both with and without PPI; just one quote didn’t include it at all.
The results were similar online – Lloyds TSB, Tesco and NatWest initially quote with PPI and the borrower has to click through to another page to get a quote without it.
Income protection insurance
Norwich and Peterborough’s website gets top marks for clarity though – borrowers choose at the start of the process whether they want a quote with or without PPI.
Payment protection insurance (PPI) isn’t compulsory and income protection insurance is a much better option for most people.
Both the Financial Services Authority and the Office of Fair Trading have expressed concerns about the PPI market, and the FSA recently fined a number of lenders for mis-selling .
Which? Money Editor Martyn Hocking said: ‘PPI is not always suitable, yet our research shows that lenders are still extremely keen to sell it to us. By adding PPI to loan quotes automatically, people could be tricked into buying it regardless of whether they need it or not.
‘If you’re taking out a loan, make sure you know if the quotes you get include PPI – it’s not compulsory so if you don’t want it, ask the lender to remove it.’
Which? Money provides impartial, expert information on money matters, to help people make the right choices.
It’s published monthly and is available by subscription only. A special trial offer of 2 issues for £2 is available by calling 0800 0321 177.