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What does "Front Loaded" mean in relation to PPI?

(5 Posts)
jodee Thu 13-Feb-14 19:03:07

Just starting the ball rolling with PPI, reading some threads on here I see mention of front loaded PPI? What does this mean (thicko emoticon)

tshirtsuntan Thu 13-Feb-14 19:09:35

As far as I know it means the ppi is paid at the beginning of the loan, so you pay all of that first before you start denting what you borrowed, iyswim.

ilovepowerhoop Thu 13-Feb-14 19:16:04

from googling it means the full price of ppi is added to the amount of the loan at the start and you pay interest on both the loan and the ppi in your monthly payment. It means you couldnt just stop paying the ppi as it is included in with the loan amount.

www.financial-ombudsman.org.uk/publications/factsheets/payment-protection-insurance.pdf

ilovepowerhoop Thu 13-Feb-14 19:17:22

from the above link:

In many cases, the PPI premium is charged
up-front in one lump sum – called a “single
premium” – that is added to the loan. So the
monthly payments the consumer makes
towards the costs of the insurance aren’t
actually insurance premiums– they’re
additional loan repayments (and interest).
This means that consumers can’t just stop
paying for the PPI. Instead, they have to
get a refund – which may be refused, or be
for an amount the consumer thinks is too
low.
Many consumers argue that these
arrangements are unfair – especially if the
loan is paid off early as part of a plan to
restructure (or consolidate) debts when
they are in financial hardship

jodee Thu 13-Feb-14 21:01:37

Thank you everyone, much clearer nowsmile

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