cancelled ppi query - URGENT!!

quebe

hello folks

i've got a loan with the halifax (£8k over 5 years) where the payments are £236 per month, which is made up of £182 for the loan and £54 for the PPI (halifax's creditcare gold).

i wrote to halifax to cancel the insurance and stated that i expected tmy payments to reduce to £182 for the loan only and for them to advise of any refund due to me.

they have written back to say they have cancelled the insurance and credited £621 to my account, leaving a remaining balance of £7639.

they then state that i can carry on with my current contractual payment of £236 and finish the loan early or they will allow me to make reduced payments of £218 over 35 months.

to me, this is well out of order. before i speak to them, a couple of questions:

1) Can they do this? The T+Cs say i may be entitled to a refund of insurance premiums and nothing else. I want the refund sum paying into my bank.

2) why haven't they done as i asked?

3) Where are they getting a figure of £218 from when the insurance payments were £54? surely as i no longer have loan insurance the payments should just reduce to the loan payment only?

i'm happy to continue paying the loan over the agreed term, so i just want my money back that i'm entitled to (which is more than i expected)

apparently i only have until the 2oth to decide what i want to do, so any quick answers/opinions would be brilliant!

thanks in advance!
quebe

marshallka

Hi, just to explain the single premium thing here first.

You actually loan the money to pay a PPI premium in full at the beginning of the loan. This is then another loan on top of your original loan to pay over to the insurer. Your premium is then paid in a lump sum but you are now paying interest on this "other" loan at the same rate as your original loan and over the same term even though most of the time you are only insured for the first 5 years. When you ask to cancel the PPI they only cancel the "premium" BUT you would still owe all the interest on it, so you would only get back usually a small proportion of the premium cost (without interest). You would then have the loan drawn up again with the remaining original loan and interest and whatever interest is still outstanding on your loan to pay the PPI. This is why they do not reduce your repayments by the full amount you are paying for the PPI .

quebe

Thanks for replying. That doesn't seem quite right though. How can I be paying interest in something I'm not borrowing? Surely they can't charge me for a loan I no longer have?

Even so, why does the refund not come straight beck to me? It feels like a massive con, although I shouldn't be surprised ascots the Halifax...

marshallka

quebe wrote: »

Thanks for replying. That doesn't seem quite right though. How can I be paying interest in something I'm not borrowing? Surely they can't charge me for a loan I no longer have?

Even so, why does the refund not come straight beck to me? It feels like a massive con, although I shouldn't be surprised ascots the Halifax...

Hi, you are not paying for something you no longer have. You are just paying the interest on something you no longer have as you already paid your PPI premium at the beginning of your loan and took another loan out for the pleasure. This is why these single premiums are so wrong and if this was not explained to you when you took this out then this could have been very well missold. You can still make a misselling complaint even if you have cancelled the PPI and if you won would be put back into the position as if you never had it at all.

quebe

ok, i vaguely understand that, i think.

can i not have the refund paid to my bank account rather than credited to my account though?

it still doesn't seem right that i'd get £600 credited back to me, but my payments would hardly be affected.

marshallka

quebe wrote: »

ok, i vaguely understand that, i think.

can i not have the refund paid to my bank account rather than credited to my account though?

it still doesn't seem right that i'd get £600 credited back to me, but my payments would hardly be affected.

No, you can only have a "rebate" against the loan if you have cancelled the PPI as your PPI is actually a loan to pay for a premium in full. You are only getting a small proportion back and your repayments would only reduce a tiny bit.

Say your PPI was £1500 and interest on the PPI was £500 totalling a LOAN of £2000. Say that this was over a loan of 7 years but the PPI only protected the first 5 years of the loan!!!. You then cancelled the PPI after having the loan for 3 years and you got a rebate.

Say the loan repayments to pay the PPI were £24 a month at an interest rate of 8.91%.

The rebate would be worked out at least 78% of the "remaining" PPI which would be worked as follows

1500 divided by 5 = 300 per year PPI
300 x 3 = 900
Remaining PPI £600 x 78% = 468

£468 would then be credited to your account BUT the interest of £500 would still be on your remaining balance of BOTH loans. The one that paid the PPI upfront and also the one that you originally had.

Although you would now expect your repayments to reduce by the £24 a month you are paying they would not. You made repayments of the PPI for 3 years totalling £24 x 36 = 864. Your total loan to pay the PPI would be 24 x 84 months (because your loan was over 7 years BUT your PPI only usually covers for 5 maximum) = £2016 - 864 = 1152 (remaining on the loan that paid for the PPI) and your rebate for cancelling would be 468 so you would still owe (regardless of cancelling)£684 for something you no longer have. This £684 would then be added to your balance of your NEW loan as they usually do another loan agreement when you cancel (some do not though) so you then owe whatever was left after making repayments for the orginal amount your borrowed AND then this amount of £684 which is left for you pay even though you no longer have PPI. This would be repayable over the next 4 years of your loan payable at about £14 a month so your repayments would reduce by a tenner maybe of the original £24 you WOULD have paid!!!!!This is why they are so wrong and only profitable for the banks and sellers of these policies.

I will be tinkering this post again later but hope you can understand to a little.