Egg Loan PPI front loaded

MikeRB_2

Hi, first time poster. Hope someone can help.

I emailed Egg to ask how much of a refund I'd get if I cancel my PPI on my loan.

I have around £7500 left to pay on a £14500 loan. This is the reply I received.

"Thanks for your message.

Let me explain.

Unlike the interest on Egg Loans which is calculated on a daily basis on a reducing balance, the Payment Protection is 'front-end loaded.'

This means in the early part of your Egg Loan term more of the payment is paid towards the protection element.

When you first took the loan out in August 2003 the cost of the Payment Protection premium in total was ?2604.16.

The remaining value of your insurance premium is currently ?116.92, therefore, the difference between these two figures is what you've paid so far, towards the protection.

I can't calculate the individual cost of the remaining protection each month, as it's included in the monthly payment, together with the capital and interest.

I trust this clarifies matters for you, however, if you require any futher information, please don't hesitate to send me another message.
"

How can this be right? Surely, if I don't use the PPI for the remaining part of the loan, I should be refunded monies I have paid. I have emailed them back saying this and also how I only took the PPI as I was led to believe at the time that adding PPI would increase my chance of being accepted for the loan.

James240

but if u have already paid for it as it was "front loaded" surely u wouldnt be due a refund because u have already paid for it? or is that me getting a bit confused

MikeRB_2

James240 wrote:

but if u have already paid for it as it was "front loaded" surely u wouldnt be due a refund because u have already paid for it? or is that me getting a bit confused

Yes, but surely if you are not using an insurance, why pay for it.

eg. if I paid a years car insurance, then cancelled after 1 month, I'd be due a refund. Why is this different?

James240

i understand what u are saying but perhaps PPI is worked out differently :think: im sure the experts on this board will be here soon to give u the ins and outs

MikeRB_2

James240 wrote:

i understand what u are saying but perhaps PPI is worked out differently :think: im sure the experts on this board will be here soon to give u the ins and outs

Ok, thanks for your replies. I could be wrong, just seems unfair that if I cancelled the PPI now, I'd have paid for something I have now cancelled.

I'm no expert though.

Gal

Mine wasn't - Mine was spread over the months - When I called them and explained I wanted it removed I got confirmation telling me that they had done what I asked. My loan went from 8000 to 6600 now I am paying it back quicker then there asking for anyways.

mattp_3

it certainly does seem unfair, but car insurance works the same way - if you cancel after 6 months you only get 20-30% back (thats what I remember from my policy docs)

If it was Front-Loaded, then surely the PPI should be completely paid off by now? (Being the first thing to be repaid from the loan payments?)

you should certainly get more than £111 back if you are only half way through the loan period?

MikeRB_2

mattp wrote:

you should certainly get more than £111 back if you are only half way through the loan period?

It was a 4 year loan taken in 2003, but last year, I extended the loan period for another 5 years due to circumstance.

However, I understand the PPI is proportionate to the loan amount, not the loan period.

Gal

Sorry forgot to mention mine was an Egg Loan as well - I think there just getting fed up with people taking the PPi off there loans and are using this as an excuse. Certainly sounds that way.