Why PPI is So Often Mis-Sold?

PPI or Payment Protection Insurance is one of the tools used by lenders to ensure the retrieval of the money lent. This feature is beneficial for both the lender and the borrower as it guarantees the repayment of the money loaned out, and also provides security to the borrower in case he is unable to pay off full or part of the debt.

However, many people do not opt for Payment Protection Insurance as they of think it as an extra expense. This might be true for small loans, but for heavy loans, it would rather be a good idea to have PPI because of its benefits for the borrower in case of any mishaps.

It has been observed that sometimes Payment Protection Insurance is mis-sold to the borrowers, which means selling it to them without their knowledge. Moreover, people are sometimes forced into paying much more than the due amount of their loans.

The main reason for mis-selling the Payment Protection Insurance program is that it gives the lenders a way to gain extra profits. The chances for borrowers using the benefits of this feature are very less. Therefore, the lenders add the extra mount to the premium, making it a part of the interest and thus, deceive the borrower in disguise.

More than often, when we examine our credit card bills and other bills of advances and loans, we find some irregularities; they are often premiums for Payment Protection Insurance. Payment Protection Insurance policies are very expensive and often result in more profits for the lenders, which is why many lenders feel it in their best of interests to charge the borrowers for PPI.

Many lenders make the borrowers believe that they would not be able to get a loan if they do not accept the PPI program along with the loan; thus, they trick their customers into buying unnecessary PPI policies. It has been estimated that lenders make approximately 900% profit by making borrowers choose this Payment Protection Insurance program.

Hence, the lenders make people choose PPI policies even if they do not want to, and make them pay much more than they should originally be paying. Typically, a loan worth £20 in money value would cost a borrower around £1200 with the PPI, thus, the extra £1180 is the profit that the lenders make on such loans.

Besides other reasons, the greed to make higher profits is one of the main reasons why PPI is often miss-sold. The ignorance of borrowers makes lenders take advantage of the situation and charge much more than they actually should.