It is possible to get an idea of the amount you may be awarded when reclaiming mis sold payment protection insurance (PPI) fees, but it’s worth keeping in mind that the figure may not be entirely accurate.
There are many factors that can influence each individual case, and sometimes online calculators don’t take them into account. For example, the outcome can be very different due to the following:
a) Your policy may be a single payment or monthly payment policy.
b) There are differences between loans and credit card agreements.
Your original credit agreement will tell you the cost of the PPI policy when you agreed to the loan; however, it is easy to lose such paperwork, so if you cannot locate yours you can call us on 0800 131 3307 and we will contact the lender and submit a Subject Access Request (SAR) on your behalf in order to obtain the information required to calculate the value of your reclaim amount.
How to Work Out A PPI Claim for a Single Premium Policy
Even if you do not have your credit agreement it is still possible to get a reasonably accurate idea of the possible PPI refunds you could be entitled to, but you do need to have the following information to hand:
- The amount of the loan
- The terms of the loan
- The interest rate or APR payable on the loan
For the purpose of this exercise we have assumed a £10,000 loan, taken out over a five year period, repayable at 7.9% APR which is a typical amount. A standard PPI policy will cost around 25% of the total amount of the loan (although it can be much more) so you need to add £2500: this means your total loan amount is now £12,500. Here are the calculations needed to arrive at your repayment amount:
Loan Amount = £10,000
Term of Loan = 60 months
Interest Rate = 7.9%
Interest on Loan = £3,950
PPI Premium = £2,500
Interest on PPI Policy = £987.50
Total Repayable = £17,437.50
You will see that we have added 7.9% APR onto the £2500 PPI costs over a five year period, arriving at a figure of £987.50. We have also added an 8% compensation figure onto this amount, which brings the total amount you should be able to claim to £3,566.50.
However, it may not be so simple: things get more complicated if you paid off your loan early as your PPI reclaim figure will be reduced pro-rata to the number of months you paid for, and if you are still paying off the loan things may also be difficult to determine.
How to Calculate A PPI Claim on a Monthly Premium Policy
A monthly premium policy, on which you pay a fixed amount every month into your PPI policy, is the easiest to calculate a figure for. Your annual statement will give you a clear indication of the cost of your PPI policy.
However, it is difficult to give an average payment figure thanks to the different monthly fees; we have seen monthly payments as low as £9 and as much as £150, for instance. Once you know how much you pay per month, multiply that figure by the months paid, add 8% interest per annum, and that is your PPI reclaim amount.
How to Calculate A PPI Claim on a Credit Card
This is the most difficult calculation to make as, typically, the balance on a credit card will vary from month to month, and the PPI payment will be calculated at the point where that month’s interest is added.
A standard PPI figure for a credit card should be around 1%; thus, if you have a £5000 balance at the end of a month, £50 will be added to the balance. In addition there is an interest figure for the year – usually around 20% but sometimes more – that needs to be accounted for.
This is why there are no average figures for credit cards but, for your information, one of our customers claimed back almost £33,000 on one card!
We Can Assess Your PPI Claims
So, now you know how to calculate your probable PPI repayment fees, and without using a PPI calculator, but how good are you with numbers?
We know that many people are not confident working out APR figures, so if you need further help or advice, and with no obligation, why not fill in our contact form and one of our advisers to give you a call back.