Rule of 78

Boss79

Hi, Have a loan with Tesco Bank. I Had PPI on it which I recently cancelled, but they have only dropped the monthly payment by £19.18 even though my loan Agreement states that I'm paying £42.63 a month in PPI (was added to loan at beginning and interest was added to it. I think it's called a front loaded policy).
When I queried it, I was told they have used the "Rule of 78" To calculate my rebate due on PPI part of loan. I thought this was abolished in June 2005, But I took the Loan out in Jan 2006. Does anyone know if this is correct? or am I being fleeced? Because to me it still looks like I'm paying £23.45 per month for a cancelled policy.

Any help would be very much appreciated.

Thanks

amersall

This is what happens when you cancel ppi on a loan i am afraid.
They should now be using the 1+1 method for settlement figures,not sure if this applies to cancellations of ppi.
As you have cancelled the ppi then the remainder after the rebate is still on the loan to term end that is why your payment has only reduced slightly.

If you have reasons for mis sell then put a claim in.
http://www.moneysavingexpert.com/reclaim/ppi-loan-insurance#step2

jonesMUFCforever

Why cancel the PPI as opposed to claiming a missale?
With a missale you would have had the whole premium back.

Azrael_1701

jonesMUFCforever wrote: »

Why cancel the PPI as opposed to claiming a missale?
With a missale you would have had the whole premium back.

Because maybe the OP wasn't mis-sold and just wants to cancel the policy...?

amersall

Azrael_1701 wrote: »

Because maybe the OP wasn't mis-sold and just wants to cancel the policy...?

This is frontloaded ppi and stands a good chance of mis sell,this is a loan on the loan and paid back over the term with interest,unlike a monthly ppi where if you repay the loan early the ppi is done with.

When you repay a loan early with frontloaded ppi on, you only get a small rebate of ppi so the remaining ppi you have to pay back.