If you were sold a PPI policy that you had no chance of claiming on, you might be eligible to reclaim some serious money - thousands of pounds, in fact. While your lender will be able to calculate the exact amount of the refund you're entitled to, you can estimate how much money can be reclaimed. Here's how.
The Formula
The insurance cost on loans is the simplest to calculate. First, take the length of your loan and multiply it by the amount of money you pay each month. Then subtract 15% from the total. This will give you a rough idea of how much insurance money you can reclaim.
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Example: 36 months X £100 per month = £3,600.
15% of £3,600 = £540 total insurance cost.
Note that the 15% figure is merely an average; actual PPI policies can range from 10% to 30% of your total loan costs.
The total insurance cost for credit cards is more difficult to figure out. Loans have regular monthly payments, but your monthly credit card charges vary depending on what you purchase. Estimating the insurance cost on credit cards is more like a rough guess, but here is some advice to get you started.
On average, you will pay £10 in insurance costs for every £100 of credit card debt that you've carried for a year. A far easier way is to keep your credit card statements and add up the listed insurance charges from the beginning of your PPI policy to the present. If you don't have your paperwork, though, you can use the average figure above to guess at the amount of money you can reclaim.
Example: £2,500 of average debt X 3 years = £750 in insurance costs.
What If You Don't Have Paperwork?
If you don't have your original loan agreement or your credit card statements, get in touch with your lender and ask them to break down and explain all the charges you've incurred. Ask them directly about the cost of the PPI policy and how much you've paid in. Send this request in writing so that you'll have a record of the communication. The lender must respond within 40 days. If they do not reply within that time, you can complain to the Information Commissioner. It's generally good form to call the lender before registering a complaint.
Please note that, if your policy ended more than six years ago, your lender might not have records of it any longer. If you don't have your own paperwork, it's unlikely that you'll be able to reclaim your money.
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