Cheap loans plans without PPI.

The hot issue for many loan providers at the moment is the inclusion of PPI, or Payment Protection Insurance, with the loans they offer.

In the past many providers were happy to include PPI cover with their loans, which meant a more expensive deal for the customer, but removed a level of risk that the loan would not be repaid regularly.

For secured loans, which use the borrower's home as equity against the loan to reduce the risk for the loan provider, PPI cover could be more important, because loan defaults can ultimately lead to home repossession.

The issue of PPI sales is currently being reviewed and the FSA is making loans providers act differently when promoting the insurance element. Without being able to offer genuine advice unless they are FSA authorised to do so, most loan brokers are only able to provide information about the insurance options on their loans, leaving the customer to decide on the purchase.

By chosing not to take a PPI policy alongside their loan, customers can make their loans cheaper, but then run the risk of defaulting on repayments should their earnings reduce as a result of a period of unemployment or sickness.

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