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SURGE IN PERSONAL LOAN APPLICATIONS PREDICTED FOR NEW CAR REGISTRATIONS – BUT BROKER WARNS ON EXPENSIVE PPI COVER FROM HIGH STREET LENDERS

Scramble for personal loans predicted in the run up to September 1 new car registrations - stand-alone payment protection insurance broker Paymentcare.co.uk warns borrowers to beware of expensive payment protection insurance (PPI) bolt-ons to their loan offer.

AS more than 400,000* motorists prepare to pick up the keys to a new car when this Autumn's registration plates go live on September 1, Paymentcare.co.uk warns those arranging personal loans to finance their cars not to be caught out by expensive loan protection cover.

While affordable APRs on many loans are seductive, signing up for payment protection insurance along with the loan can add thousands of pounds to the overall cost of the borrowing if bought through a high street provider.

“Many people are now taking advantage of low cost loans to buy a new car,” said Shane Craig, managing director of Paymentcare.co.uk.

“But add on the cost of the PPI offered by the lender and monthly repayments could be significantly higher.”

According to research by online data analyst Moneynet (www.moneynet.co.uk) ** a typical loan of £15,000 from a High Street lender, for example, will cost around £300 per month over 5 years – a sizable financial commitment - but add on banks’ and loan providers’ typical monthly PPI premium of £60 and the repayments on a loan rocket.

Taking out cover from Paymentcare.co.uk however can save hundreds of pounds over the term of the loan as premiums typically cost around £16 a month to cover a £15,000 loans.

“Borrowers are often caught out by a double whammy, as most lenders add the cost of PPI as a single premium to the loan upfront – which means that borrowers are effectively paying interest on the insurance cover,” argues Craig.

“Paymentcare’s PPI policies are paid on a monthly basis meaning that the cost of PPI does not accrue interest.”