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Payment protection insurance is a type of insurance that some lenders require borrowers to have if they are unable to provide a down payment, or provide a very small down payment. Often lenders will also require those with a bad credit history or no credit history to have payment protection insurance on the amount that is being borrowed. Lenders may even offer payment protection insurance to those who do not require it, and often make people feel as though the insurance is necessary in order to obtain a loan.

Payment protection insurance is an insurance that covers your monthly repayments should you end up unemployed or in an accident where you are unable to work. It sounds like good coverage, however it can be very expensive. On a three-year loan of £5,000, you could end up paying £500 or even £1,000 extra on your loan for the payment protection insurance.

Some online loan quotes will automatically include the payment protection insurance in the cost of the loan. So be cautious of that, and ask for a quotation without the payment protection insurance. If you know that you are able to cover your monthly repayments and have an emergency fund or savings account set aside, then you may want to mention that to the lender when you are applying for a loan. You should never feel intimidated or forced to take on the additional payments for a payment protection insurance plan. Often, lenders will make you feel that you unless you take out their payment protection insurance policy your loan will be refused. However, that is untrue, and you should never be required to make payments on something that you do not want, or need. Often if you already have insurance you may find that your current policy will cover your financial expenses. So check into that before applying for a loan, so

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