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Payment Protection Insurance – The Facts You Need To Know
Payment Protection Insurance cover is a type of cover that is offered with finance such as credit cards, store cards, and loans. Like other types of insurance cover Payment Protection Insurance, or PPI as it is simply known, is designed to provide financial protection under certain circumstances. When you take out finance you may do so under the assumption that you will be able to keep up with repayments throughout the term of the finance. However, this is not always the case, as life does tend to throw a few surprises our way, and this is where PPI can kick in.
PPI is designed to cover your finance repayments for a specified period in the event that you are unable to work and make your repayments due to sickness, accident, or redundancy. The terms and conditions, including the restrictions and exclusions, with this type of policy can be strict, and therefore you do need to carefully check the small print to ensure that the policy is suited to your needs. Not everyone will benefit from PPI – for example, this type of insurance covers your repayments in the event of redundancy, but this is something that you cannot benefit from if you are self employed.
The cost of PPI can be high, but at the same time this form of cover can offer valuable peace of mind, so it can be difficult to decide what to do. Those that do not want the expense of PPI should remember that this is not a compulsory form of cover and there is no obligation to take any PPI cover out at all. For those that do want this protection but don’t want to pay a fortune, it is worth remembering that you are not obligated to take your cover from any particular provider, and therefore you may be able to save money on the cost of cover by shopping around and comparing different PPI plans from a number of providers.
Whether or not you take out PPI with your finance is entirely your choice, although some lenders may make it sound as though this cover is necessary and even make it sound as though taking out PPI will increase your chances of getting finance – this is not the case. PPI, like other types of insurance, provides optional protection to consumers for a price, and you need to weight up the pros and cons before you make a commitment. You should also make sure that you check any policy that you are thinking of taking out carefully to ensure that the cover is suited to your needs and circumstances, otherwise you could end up wasting a large amount of money on insurance that you can never benefit from.
Some insurers however to offer protection schemes specifically designed for self-employed people so they are not paying for benefits which they would not benefit from.
The Risks Of Co-signing for a Bad Credit Loan
Lenders who offer bad credit loans usually require the applicant to have a co-signer. Many people who have imperfect credit history ask their friends or relatives to help them get their loans approved by co-signing the contract.
Have you been asked to co-sign for someone? If yes, have you considered the possible risks involved with being a co-signer? Are you clear about what your duties and responsibilities would be as a co-signer? What can you to protect yourself as co-signer? In this article, lets answer these questions one at a time.
Possible Risks Associated with Co-signing Co-signing a loan for another person means that you guarantee that he/she is capable of the loans repayment. With this assurance, you agree to take over the repayment obligations in the event that the primary loan holder defaults.
Unfortunately some people immediately sign-up the contract without first reviewing the Terms and Conditions or without a clear arrangement with the primary loan holder. Take note that as a co-signer, your personal credit history can be damaged in case there are problems with the loan holders repayment.
Some lending companies will only try to get in touch with the co-signer after the primary loan holder defaults. However, the damage has already been done to your own credit. You may also be taken by surprise that you are now accountable for the loan holders debts.
Some co-signers also found themselves in the middle of a messy situation. By the time you need to apply for your own loan, you may find it difficult to get an approval. Lenders may see you as a “risky” client because you are already responsible for another loan. Although, it isnt directly under your name, you are still responsible for its repayment in case of default.
On the other hand, if the lender feels that you are still capable of taking on a new loan, you may get an approval. However, if your credit rating has been pulled down due to someone elses late payments, you may not qualify for the best rates from your lender.
Thus, the best advice to remember before co-signing a loan is to treat it as if its your own. If you are not sure whether you can keep up with its repayment, then it would be safer not to co-sign the loan.
Co-signer How to Protect Your Own Credit If you are willing to co-sign, the best way you can protect your personal credit and reputation is to closely monitor the primary loan holders payments. Request the lending company to send you a copy of the monthly notices or updates so you can be immediately made aware if the loan holder falls late with the payment.
Evaluate the Terms and Conditions with the loan holder. Make sure that the person you are co-signing for is clearly aware of his/her obligations. If you have any concern, dont be afraid to discuss the matter with your friend. Make an agreement with your friend and ask him/her to talk to you about anything that concerns the repayment. After all, it is your credit and finances that is also on the line.