Cancelling Loan PIP/PPI

We're in the same situation with HSBC. Firstly we'd have to cancel the existing loan then reapply for a new loan without the PPI, thus having another credit check....and not to mention the fact that they could refuse us the second time.... all a load of bl**dy rubbish if you ask me... they've got you over a barrel :mad:

mako,

I'm not sure they are correct.

They have sold you two products, a loan and an insurance policy.

The insurance policy is for your benefit, not Northern Rocks. They should have offered you the loan on the basis of your ability to pay it pack from your income and a credit check, not whether you took out PPI or not.

I'd give them a lot of hassle about this and threaten to contact the insurance ombudsman. You can also tell them you plan to take PPI from another insurance company and it is none of their business since the insurance is with Pinnacle and not Northern Rock.

What you do need to understand though is that with base rates expected to rise to 5% soon and Northern Rock only charging 5.7%, the 0.7% isn't enough to cover their costs and the amount of customers who can't afford to pay them back. They therefore rely on PPI sales to make this loan profitable for them. Their customer service teams and sales people are under a lot of pressure not to allow people to cancel and get big bonus' for selling PPI.

I guess the analogy is new car sales where a dealer is prepared to sell the car at cost but makes all the money on extended warranty and future servicing income.

Personally I think that loan companies should charge a fair amount for loans and a fair amount for the insurance, not rely on the insurance sales to subsidise their primary loss making loan business.

R.