a querie about my loan protection

mireiacassou

3 years ago I signed for a loan with repayment protection for a lenght of 8 years. Too late I realised that I borrowed 16000 so I had to pay back 32000.
That is £314 at month.
I woke up this morning with a thought. If people are claiming back their loan repayment protection, maybe I can contact my bank and ask for a cancellation of the protection plan. When I phoned they told me that they would sort it in the branch but when I went there they told me that is not possible. That I should take another loan to pay off that first one ,without the protection. But I don't really want another loan. They say that the loan and its protection cannot be separated, that because I signed with the protection now I have to continue with it.
Is that true?

standupguy

You can cancel the loan protection.

Your Lender may need to sign up a new agreement to facilitate this but they are under an obligation to ensure that you are no worse off - that means the loan has to be at the same rate as your original loan with the number of repayments the same as you now have outstanding.

You should find that the monthly repayment will then be much lower.

standupguy

This is some info pasted from the FSA website - thought it may help with relevant clause in bold

We worked with the relevant trade associations1 to look at nil refund terms in single premium PPI contracts.
We take the view that this type of term may be unfair under the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations). This is because, contrary to the requirement of good faith, it could cause a significant imbalance in the parties' rights and obligations under the contract, to the detriment of the consumer.
The trade associations have agreed that firms should provide partial refunds in their PPI policies if the consumer cancels the policy for any reason. This is unless a policy is very near to its end, a claim has already been paid under the insurance policy or the consumer has chosen to continue with the policy as free-standing cover, for example as income protection insurance.
As agreed with the trade associations in October 2006, firms which have nil refund terms in their contracts should change their contracts so new contracts contain terms which provide partial refunds. These firms should also write to their existing customers to tell them how they will deal with refunds in practice. Firms should ensure that new customers receive clear and accurate information about PPI refunds in contracts and other product literature.
When consumers cancel the PPI without repaying the loan, some firms will need to reissue the loan without the PPI. Firms should ensure they treat their customers fairly in relation to the terms on which they reissue the loan.
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The fairness of the refund


We have looked at terms relating to the amount of the refund to be provided, and the clarity of these terms. Because of the differing types of firms and commercial practices within the PPI industry, we do not intend to propose a single refund method for all firms to use. We believe refunds should be calculated to take firms' reasonably incurred costs into account. These costs will depend on the individual firm, but might include administrative fees, a proportion of commission and the uneven spread of the risk across the length of the policy. Firms may find it useful to carry out a review of their refund terms to ensure they are fair under the Regulations

aj2703

So if i were to cancel my loan protection on my Alliance + Leicester account, they have to cancel it no questions asked etc..?. I was told that sometimes they do re-score you and can then up the interest on the origional loan and you can't do anything about it. Has this now changed then...?

standupguy

They have to treat you fairly as per the FSA guidelines.

Of course, they will try and up the rate or extend the period etc and for those that do not know they may get away with it.

You should ask them to cancel the PPI in such a way that there is no detriment to yourself or you should advise them that you will make a formal complaint which you are prepared to take to the Financial Ombudsman service.

schmooly

I bought a car two years ago from a well know car hypermarket. I was sold a policy that covers parts on my car providing I have had a stamp for yearly services. When I realised my loan had gone from 12,000. for the car but up to 18,000 with this insurance.
When I wrote to them to see if I could cancel the insurance to make to payments cheaper I was informed that this was not possible and I had 30 days to cool off then it was binding. How true is this and is there a way out of this insurance policy.