Credit agreement-car insurance

MsM_2

I just renew my car insurance for £292 at the weekend, decided to go for direct debit option this time...
I could only renew over the phone, and after listening to what I thought was the direct debit credit agreement over the phone, gave my bank details and thought that was that.
Today I got an e-mail from Premier Credit Online informing me of an pre-contract agreement for running account limit of £1500 !!
I did not ask for a loan! ( !at 13.8% APR)

I called my insurer to cancel de DD and pay in full. Not possible, since aparentely I already agreed to this contract and I've should have paid attention !
I'm fuming. :mad:
At no time the sum of £1500 was mentioned.
I've got to call Premier Credit Online and settle it with them.

I wonder if anybody has any experience of this practice, I always paid in full for my insurance, and all other DD I've got set up, I never been given a credit limit other than for the amount needed.
Really confused....please somebody put my mind at rest:(

dunstonh

I did not ask for a loan!

yes you did. Indeed, your first line of your post confirms you did.

At no time the sum of £1500 was mentioned.

Its just a technical figure and not an amount you are borrowing.

I wonder if anybody has any experience of this practice, I always paid in full for my insurance, and all other DD I've got set up, I never been given a credit limit other than for the amount needed.
Really confused....please somebody put my mind at rest

Car insurance is an annual contract. If you wish to pay monthly it is done via a credit agreement as a loan. i.e. your borrowed £292 to allow the insuer to be paid their premium with you paying the loan monthly over 12 months.

In the past it was a little less formal on the credit side but with try-it-on consumers looking for loopholes to get out of paying genuine debts, the credit agreements were formalised to avoid loopholes being found. Hence why it reads as a loan to you as it is actually a loan.

mikey72

£1500? They've probably seen next years renewal.

Were you informed of the apr at the time?
Otherwise it seems all in order.

Here's one for dunstoh though.
In the good old days, if you didn't pay the insurance each month, they cancelled, as you obviously hadn't paid.
Now, the insurer has had the money from the loan company, (hence the interest) all up front.
If you don't pay, can they still cancel, or does the loan company have to pursue you for the oustanding balance?

vaio

or both.......

MsM_2

Thanks dunsonh for your reply.

I undestand that the DD is a loan, but for 292 and whatever interest.
I don't agree with the £1500 limit which in effect gives them free range for extra charges should they wish to do so ( when my intermediary decides to stick a couple of imaginary fees in there)
After all if I agree with the terms in the small print I'm good for the £1500, since my £292 is just the first transaction.

It's not a good practice, is it?....it's very good for them, I can see that alright.

I haven't signed this agreement, so will call tomorrow and pay in full. I just hope this will be the end of it...:(

dacouch

mikey72 wrote: »

£1500? They've probably seen next years renewal.

Were you informed of the apr at the time?
Otherwise it seems all in order.

Here's one for dunstoh though.
In the good old days, if you didn't pay the insurance each month, they cancelled, as you obviously hadn't paid.
Now, the insurer has had the money from the loan company, (hence the interest) all up front.
If you don't pay, can they still cancel, or does the loan company have to pursue you for the oustanding balance?

The loan is secured against the policy, if you default the loan company will instruct the Insurer or broker to cancel the policy. The return premium is sent to the finance company and they will then (Aggresively) pursue the balance which may have a fee added to it.

The £1500 amount is an amount they will have agreed with the Insurer / broker for most of their clients meaning it's in effect pre approved (As they have the security of the policy). Above this amount they may have had to ring for authorisation, the higher amount also allows any adjustments to the policy eg additional premium for a change of car

mikey72

I would think it would be more to cover mid term adjustments, eg moving house, changing the car, adding a 17 year old (may not be enough for that), and your monthly premium would be increased, but the insurers would be paid in full by a further loan.


edit - beat me to it

oscarward

If it's the same people as did the insurance loan for my son then they are an OK organisation who provide revolving credit up to a limit which they decide. You've only used £292 of a total credit facility of £1500. In my sons case £1400 was paid off over 9 months.

They are helpful over the phone on the few occasions I had to ring them.

How much is your DD set at?

mikey72

dacouch wrote: »

The loan is secured against the policy, if you default the loan company will instruct the Insurer or broker to cancel the policy. The return premium is sent to the finance company and they will then (Aggresively) pursue the balance which may have a fee added to it.

I should have known you were going to say that!

MsM_2

oscarward wrote: »

How much is your DD set at?

It's set at £30.84. The figures are correct, I'm just not comfortable having £1200 extra credit I didn't ask for...

Thank you oscarward for saying they are helpful.

Thanks everyone for your thoughts :beer:

scheming_gypsy

Is it every company that does it like that now? and what happens if you can't get credit?