Borrowers who take out payment protection insurance (PPI) from their loan provider could be adding thousands to the cost of their loans, says new research.
Financial website uSwitch.com says PPI policies could add up to a 467 per cent increase on the total cost of a loan.
A report by the Financial Services Authority (FSA) released last week found many of the loan insurance policies - which are designed to cover debt repayment if the borrowerloses their income - were being sold to people who would never actually be able to claim on them.
Figures from uSwitch.com estimate taking out PPI on a £10,000 loan could increase the total loan amount to £13,000.
"The willingness of providers to promote payment protection insurance can lead to policies being mis-sold to consumers," said Nick White, head of personal finance at uSwitch.
"Many are under the mistaken belief they are getting the best rate, or that by simply taking out this product they may be more likely to be approved for a loan."To read more about Personal Loans, click here.
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