CHRISTMAS shoppers facing the strain of having to find funds for another year’s unavoidable outlay on gifts, food and merriment must make sure their ability to repay is securely wrapped up if they intend to rely on a loan, says independent payment protection insurance provider Paymentcare.co.uk.

The grim fact that Britons now owe £216billion on unsecured loans and credit cards* is sobering news for the pre-festive period but is unlikely to deter consumers from putting yet more on the slate this season.

“Every year, millions of consumers struggling to finance their family Christmas celebrations have no option but to take out an unsecured personal loan with the intention of paying it off during the coming months,” says Paymentcare.co.uk managing director Shane Craig.

“But with total UK personal debt now standing at £1,380billion**, an increase of £120billion over the past 12 months, it’s clear that Brits can’t keep adding to this top heavy burden without the real risk of it coming crashing down – and if they haven’t protected their ability to repay their loan with PPI, the New Year could be far from prosperous.”

A steady stream of exposés of the astonishing sums raked in by some lenders from the sale of PPI is already resulting in growing numbers of borrowers shying away from taking protection along with their loan – not surprising when borrowers realise that 22%*** of their monthly repayment could be just for PPI.

But the genuine affordability of stand-alone PPI from an independent provider can help to plug the gaping hole this has blown in the already shaky firewall of borrowers’ defenses against unforeseen events such as job loss, accident or sickness.

A stand-alone policy from Paymentcare.co.uk to protect the monthly repayments of £198.95 for a five year £10,000 loan would cost just £10.95****. A comparable policy from lender Alliance & Leicester would cost £57.13 per month, or £3,427.80 over the term of the loan. With the Paymentcare.co.uk policy costing a total of just £657 over the term of the loan, that makes a saving of £2,770.80.

“With so many people starting the year in debt, any way to alleviate the gloom has got to be good news,” says Craig. “A policy that costs a few pounds and can be simply cancelled when no longer needed could make the difference between recover and relapse for some families.”

* Bank of England lending to individuals statistics, 29 October 2007
** Credit Action statistics 1 November 2007
*** Based on a loan of £10,000 over five years from Alliance & Leicester. Monthly repayments with protection
£254.08, without protection £198.95 (31 October 2007)
**** Life, Accident, Sickness & Unemployment (LASU)