Northern Rock

Becles

A less financial aware friend has asked me to check over some loan application paperwork for a loan from Northern Rock. She is looking to borrow £8000 over 10 years.

She was forced to take the PPI as Northern Rock refused to send out the loan agreement without the PPI. I've got the unsigned agreements here.

The loan repayment is £99.58 but the PPI is an additional £48.31 a month :eek:

Over the term of the loan, she will have paid £3880.80 PPI and as it's front loaded onto the loan it will generate a additional £1916.40 in interest. Basically, having the PPI is going to cost her an additional £5797.20.

Northern Rock say the PPI is provided by Pinnacle. However, I went to their website http://www.pinnacle.co.uk and £100 a month ASU cover in a plan called "help u pay" costs just £2.46 a month, or £295.20 over the term of the loan.

This is a saving of £5502 over the term of the loan :eek:

How do Northern Rock get away with such excessive charges? Or am I missing something?

Xbigman

They get away with it by mainly offering the lowest APR only if you take PPI. This (as you've worked out) makes the loan very expensive.
If your friend has a good enough credit score to get a NR loan then she can go elsewhere and do better. Even paying the higher NR rate (10.9%) with no PPI would be cheaper.

Try Tesco for starters.
Regards



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