Payment Protection - Cancelling

Hello

I got a EUR4K loan personal loan from BOI in November 2004. When I applied for it I signed a form for Payment Protection Cover as I thought it was a condition of the loan. I have since realised that you are not obliged to tkae this out and want to cancel it. I have read over the documents BOI gave me at the time and it would seem that they "loaned" me not EUR4K, but EUR4.394.57, which invludes the payment protection and it would appear I am paying interest of 9% on the whole lot.

Can I ask them to cancel this now and what would the implications be? Are they allowed to charge you interest on the so-called payment protection?

Any advise would be great.

Thanks

Hi Jack,

I've mentioned this little scam a few times on here, the Scam of Loaning the Payment Protection Premiums and charging interest on them should be illegal. But as far as I can tell, it's done by more than a few lenders.

The practice of making customers believe that Payment Protection is a condition of the Loan should also be illegal. Even knowing that it was option I was recently strongly led to believe that I HAD TO have it when switching Credit Card. I really had to stand my ground to avoid it.

Good News
Yes you can cancel the payment protection, You may have to send them a letter saying that you want it cancelled.

Bad News
You won't be refunded the full premiums. They've got their hooks into you for the Premiums by loaning it to you. With any sort of Insurance you should be able to cancel and simply stop paying the premiums, but since they've effectively taken all the premiums up front you will be in the situation of seeing how much they'll reduce your loan by.

I tried about a year ago to get one of the Banks to Explain how they calculate the refund if Payment Protection is cancelled and they couldn't, they simply said it was worked out by the computer.

Upshot is you will be dissapointed by how little you get refunded, but it's still worth cancelling. And now that you've learned this valuable lesson, you'll never fall for the Payment Protection Scam again.

Sorry I couldn't be more uplifting.

-Rd

Thx for your reply Rd.

And don't be sorry - I have learnt a valuable lesson from the whole thing and I am happy to find that I can actually cancel the policy, I thought I was going to be told I couldn't get out of it.

I have just typed a letter asking BOI to cancel the policy - I will see what their reply is.

You can always ring them before posting it to check.
I'd be very interested to hear if they can explain (in writing if possible) how they calculate the amount to be refunded.

Keep us posted if you can.

-Rd

No problem, anything I get back, I'll post here.

Thanks again.

Just to update (Jack Monroe here - couldn't log on properly with my username)

I sent BOI a letter the day I posted my query here asking them to explain why i had to pay interest on the payment protection AND the loan and also asking them to cancel the PP as I thought I HAD to take it out and now knew that I didn't. I requested that they re-calculate the payments based on this.

2 weeks went passed and nothing, so I sent a 2nd letter, (not as nice as the first one!) and attached as copy of the first expressing concern about the lack of a response. A girl from BOI just called me now and explained that they had paperwork backlogs etc etc apologised for delay. They are re-arranging the loan today without PP and will send out new forms to sign. The payments I have already made will be taken off the loan amount and the future payments will be re-calculated.

RESULT!

Thanks for the help on this!