Every financial institution will have certain rules and regulation that their clients have to follow. They will be very strict in this case when the person wants to get loan. In such situation the financial institutions will check whether the applicant has the eligibility criteria to get the loan. The institutions will sanction the loan amount only if the applicant meets the eligibility criteria which have been fixed. Otherwise, the applicant cannot get the loan amount. It is very obvious that the lender would like to ensure whether the borrower has the ability to return the loan. If the person is not able to repay the loan amount, then the lender will have to struggle a lot to get the amount. In order to avoid such troubles, the lenders sell the payment protection insurance (PPI) to borrowers.
How PPI helps lenders?
As everyone knows, the individuals who purchased an insurance policy will pay regular dues and once the policy get matures, he can claim the amount. The same idea is being followed here. Once the lender sold a payment protection insurance to the individual, he will have to pay due amount properly. Hence a considerable amount of money will be saved in the payment protection insurance. If the borrower failed to return the loan amount due to any reason, then the lender can claim the insurance and take the amount. This is why the financial institutions are selling this policy to the borrowers. Since they have the insurance amount as collateral, they do not have to concern even if the borrower does not return the loan amount.
Have you been mis-sold PPI?
Actually the payment protection insurance will also be very helpful for the borrower if he lost his lost or affected by any health disorder. In such situations he will have no income therefore it will be very complicated for the borrower to return the loan amount. Since he has the payment protection insurance, the lender can easily get the insurance amount for the pending loan amount. However some of the people will be self employed and also they will pay the dues properly for the loan they have obtained. For those people, the payment protection insurance will not be needed. But still the financial institutions are selling the insurance to those people also and hence the borrowers are supposed to give an amount for the monthly insurance due.
Many lenders mis-sold the payment protection insurance amount in order to ensure their safety. But the individuals, who do not know that they can claim the amount back, leave the insurance amount with the financial institution and it will be a loss for them. Therefore if you have signed up for the insurance, then you need to Find out if you can claim the insurance amount. In case of any help, they can approach the authorities which are mainly concentrated on the payment protection insurance. The individuals who approach them in this case will get proper assistance from them and also they can file a complaint against the financial institution for mis-sold the payment protection insurance.