A PPI calculator is a very useful way of working out possible PPI reclaims amounts online, and is quick and easy to use. The problem is that, due to certain factors, they can be inaccurate. This is because each individual PPI claims case is different, and there are many factors that can influence the amount of an award. For example, the following circumstances can have a massive effect on the result:
a) Whether a policy is a single premium policy or a monthly premium policy and
b) Whether a PPI policy is for a loan or credit card or other credit agreement.
To keep things simple, you should get hold of the original credit agreement relating to the loan or mortgage that the policy is attached to. This should give you a clear indication of the cost of the PPI policy you agreed to when you took out the loan.
PPI Claims for Single Premium Policies
Even if you do not have your original credit agreement it is possible to use a PPI calculator to get a good idea of the amount you may be entitled to claim for mis sold PPI fees. However, you do need to know the following:
- The total amount of the loan
- The specific terms of the loan
- The interest rate or APR for the loan
We have put together a simple example to show you how to claim PPI and how to calculate your PPI reclaim amount. In this case we assume a loan amount of £10,000, a five year repayment period, and a typical APR of 7.9%. In most cases the cost of your PPI policy will be around 25% of the loan amount – although in special circumstances it can be much greater – so with that added, the total loan amount is £12,500 over five years. Follow the calculations below:
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
So, with 7.9% APR on top of the £2500 PPI costs we have a figure of £987.50; we also need to allow for compensation – as ordered by the courts – at 8% per annum on top of that. This brings the full amount of PPI paid on the loan – the amount that can be reclaimed – to £3,566.50.
In some circumstances it may be a little more complicated: if you have paid your loan off early, for example, your Payment Protection Insurance payments will have been lower, and if you are still repaying the loan you will be able to claim only for the months you have paid PPI so far.
PPI Claims for Monthly Premium Policies
With a monthly premium policy you pay a fixed amount each month into your PPI policy, and your annual statement will tell you how much this is. It can differ greatly, however, as we have seen policies for less than £10 per month and for greater than £150!
If you take your monthly payment, multiply it by the duration of the loan and add 8% interest per annum you will have a fairly accurate representation of the amount you can claim.
PPI Claims on Credit Cards
Credit card PPI claims are somewhat more difficult to process through a PPI calculator due to the varied balance at the end of each month. Typically, the PPI amount will be calculated at the point where interest is added, meaning that each month’s fees can be very different. A typical cost of PPI policy on a credit card is 1% – this means that a £5000 balance at the point of calculation will incur a £50 charge added to the balance – and onto this needs to be added a 20% (or more) APR for the year. This is why it is impossible to give an average payment for credit card PPI, but we will say that one of our customers claimed nearly £33,000 on one card!
Let us Calculate Your PPI Claims
We have shown you above that it is relatively simple to calculate a PPI repayment without using a PPI calculator, but it does involve some ability with maths.