Payment Protection Insurance - is this legal?

JonW_3

I've been looking at buying a new PC. One company is offering a 0% finance deal over 12 months but the small print includes the following:

*A condition of being offered the 12 months ‘Interest Free Option’ is that applicants must take out PPI (Payment Protection Insurance).
PPI protects your loan if you are unable to meet your payments due to loss of earnings through sickness/disability and involuntary redundancy.

Is this legal? Are they allowed to make taking out the insurance a condition of getting the loan?

jonesMUFCforever

I would say not, but I note you say 0% finance but NOT 0%APR. so this might be a loophole.
Personally if your credit rating is good I would go and apply for a new credit card which has the longest interest free period for purchases.You should be able to find a card providing you with at least 9 months interest free credit and all you would have to pay each month is minimum payment of 2 or 2.25% of outstanding balance and you also get protection under section 75 of the Consumer credit act should any problems arise.
Eric

JonW_3

Surely 0% finance and 0% APR are the same thing though?

It's one of those deals where if you pay it off after 12 months it's 0%, and if you don't it reverts to something higher.

I can't see how it would be a loophole though. Travel agents are not allowed to force you to take their travel insurance when booking a holiday, although they try to, so why should finance companies?

Already have the 0% card but just fancied this deal to avoid eating up more of my credit limit... but not if I have to take out the insurance. I know It won't cost much, it's just the principle of the thing.

jonesMUFCforever

Not really Jon W
You see credit card companies advertising 0% on balance transfer BUT some charge a fee of 2% up to about £50 for this privelege.
As APR has to take into account any and all charges they cannot claim to offer 0%APR for offers like this.
It may be something similar that the computer shop are trying to get away with here.
Eric