Car loan cover warning

07th February 2009

Claims on finance protection policies, which bail out car buyers who lose their jobs, have more than doubled. But the Government says motorists could soon find it tougher to sign up for this type of cover.

Record redundancies led to a 118 per cent rise in PPI Claims (Payment Protection Insurance) – from 8,772 in November 2007 to 19,105 in the same month last year – the Association of British Insurers has revealed.

After the figures were released, though, the Competition Commission announced plans to ban finance houses from offering the cover for at least a week after credit is taken out. It says this will let buyers shop around for cheaper deals.

But the move could impede the car industry’s recovery, claims Sue Robinson, boss of the Retail Motor Industry Federation. “Customers want reassurance that if they buy a car on finance they are able to meet the repayments if they are made redundant,” she said.

The news comes as ministers unveiled a £2.3billion bail-out plan to help struggling motor manufacturers across the UK.