How Payment Protection Insurance Helps You in Loans for Bad Credit?

Posted by Alina James on April 19th, 2018

The lending market is swelling up with numberless financing options for bad credit borrowers. Various types of loans are in service to facilitate the achievement of financial goals of such people. If you are among those with credit rate flaws, the obligation-free loan products like loans for bad credit with no guarantor and no fees will help you improve credit rates.  

Lenders offer flexible deals and make every effort to design a deal that is affordable to you. However, still repayment is an important part, which you cannot afford to avoid. Certainly, having no obligations is a great relief, but the interest rates are high and tenure is short-term. This means that your repayments are going to be huge. You are already bearing the curse of poor credit scores and one delay repayment will be a ‘financial suicide’.  You may even fail to make your repayments due to unexpected reasons like sickness or joblessness. You cannot let things go wrong like this. It will be a big mistake.

Let the ‘Payment Protection Insurance’ (PPI) ensure your timely repayments. It covers your monthly loan instalments. It is a short-term protection of your financial commitments. Borrowers, nowadays, are accepting this policy at a faster rate.

Situations You Need to Get the Policy

Such policies apply in some particular circumstances, like illness, unexpected redundancy, situations when you cannot work, for instance- becoming a carer or death (as depends on the policy you have taken).

What It Does Not Cover?

This is something that more depends on the lender and insurance providers, from which you take the policy. However, most of the lenders do not include the following:   

  1. Certain illnesses, however, this you need to confirm from your insurance provider.
  2. A pre-existing condition, which may be an illness that you know about already.
  3. The first 90 days of joblessness. In this period, you have to manage your instalments on your own.
  4. Retired or unemployed people.

The Cost of Taking PPI  

Your PPI cost depends on the factors like how much cover you want, the maximum number of repayments that you can claim. These factors matter more in short-term loan products like unsecured loans for bad credit. This is because they have big monthly instalments on high rate. Your insurance provider will take some of your financial details to decide the limits of your cover. It will be a decision taken on the mutual acceptance.

Factors That Affect the Cost of PPI

A lot many factors affect the actual cost of the policy and you need to take care of all of them. Those factors are:

  • Your age
  • The amount
  • Duration of the policy
  • Your occupation
  • Health (your current health and your family medical history)
  • The waiting period

Compare for Quotes

In the short term loans for bad credit, there are multiple and lucrative PPI deals available in the market. You need to do a wise comparison of all of them. Most importantly, you should know that you do not need to take the policy from your lender only. You are free to explore the market and choose a policy that suits you well. Either you can buy the policy directly from the insurance company or you can go for a price comparison website. In case of any confusion, going to a financial adviser will be no harm.

Read the Policy Carefully

It is the most important part of taking a PPI. You need to know what your policy include and what it does not include. Besides, proper information on waiting period is also of utmost importance. However, usually it is 90 days but may vary from lender to lender.

Payment Protection Insurance is ideal for those who are in bad credit situations. However, it is also important to be on your toes while applying for it. Transparency and utility of the policy should be your main concern.


Alina James

About the Author

Alina James
Joined: April 19th, 2018
Articles Posted: 3

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