In light of the ongoing PPI claims saga many websites are now offering the use of a free PPI calculator. This is an online device that purports to tell you how much you may be awarded when claiming back mis sold PPI charges. However, we have found that these are not an accurate representation, and there are a number of reasons why. The amount of each individual claim is influenced by a wide variety of factors; different types of loan will carry different interest rates and terms. Your PPI refund will vary hugely if:
a) You have a single premium policy or a monthly premium one and
b) Whether your policy is attached to a loan, a mortgage or a credit card
The easiest refund to calculate is that relating to a loan, and if a loan is the nature of your claim you should look for the original credit agreement, This will clearly state the value of the PPI policy that you agreed to, and the amount borrowed. If you do not have access to your original paperwork give one of our friendly claim advisers a call on 0800 840 7292 and we will contact your lender and submit a Subject Access Request (SAR) on your behalf. This will yield the information you require.
Calculating The Value Of A PPI Refund On A Single Premium Policy
It is still possible to calculate approximately how much you may be owed, even if you cannot find the original credit agreement. All you need is the following:
1: You total loan amount
2: The terms of the loan or mortgage
3: The agreed APR, or interest rate
The calculations that follow may look complex but are actually simple, and we have tried to explain as carefully as possible. For simplicity let’s assume a loan of £10,000 over a 5 year period. A typical APR on such a loan may be 7.9%. We know that, in a standard case, a PPI policy will add another 25% onto the loan amount, but this can vary. We now have a total amount borrowed of £12,500 including PPI. Have a look at the following figures:
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
The PPI value was originally £2500; add on the interest over five years – a total of £987.50 – and you have a possible reclaim of £3,487.50. In most reclaim cases there is an element of compensation added, usually at around 8% per annum, so over five years this is an extra £79. Your reclaim figure is now £3,566.50.
Now, that may all be straightforward, but what if you paid off your loan early? Unlikely, we know, but your PPI would have been recalculated and your payout will be less. Also, if your loan is not fully repaid the likelihood is you will be able to claim back fees you have paid so far, with the remainder offset against the outstanding amount.
Calculating The Value Of A PPI Refund On A Monthly Premium Policy
Monthly premium policies involve a set amount each month to be paid into the policy. Your annual statements will give you an accurate picture of your fees, as well as the agreed period of the loan.
Average figures for this sort of premium are difficult to assess as we have seen some as low as £9 per month and others as much as £150. If you know your monthly repayment simply multiply it by the total number of months you have paid it for and add on an annual rate of 8%. This should give you your full repayment entitlement.
Calculating A PPI Reclaim For A Credit Card
This is where things become very difficult, as credit card balances will change month on month. Typically, the PPI charge will be around 1% on every £100 of outstanding balance every month, so for a balance of £5000 you will be charged £50. Also, you need to allow for an interest rate of around 20% per year on credit card PPI. The refunds on PPI vary considerably, as a result, but you may be interested to know that one of our clients secured a payout of £32,799.63 – and that was a single credit card PPI claim!
Let Us Calculate Your PPI Claims
The information given above shows you how to calculate your PPI claims as accurately as possible, and proves that you do not need a PPI Claims Calculator. Many people will be happy to follow our instructions, but some may prefer a little help with the numbers! If you need help please feel free to contact one of our specialist claims advisers on 0800 840 7292, or fill in the simple online form and we will call you back. There is no obligation whatsoever, and we are more than happy to help.