One might say it’s a no-brainer. Indeed, calculating your PPI refunds is quite easy if you know the formulas.
Things not covered in this short guide are the actual value of your PPI in relation to your loan, credit card or financing and the possible APR you could have.
Here is how to calculate your refunds effectively:
As an example, we’ll say that your payment protection insurance costs about £3000. This is about 25% the value of a £20,000 loan. While this is not true in all cases, this serves as a good starting point.
But that’s just the value of PPI itself. It is refundable but that’s not all you should get.
Your PPI gets an annual percentage rate increase. APRs usually go around 7% to 7.9% yearly. If one calculates the 7.9% of £3000, you have about £395 increasing in your repayments per year.
If you have a PPI policy that ends in repayment within five years, you would have reached about £1975 in total APR. You could add that on top of the £3000 you could refund from your bank.
Lastly, you are also owed at least 8% compensation. PPI compensation — as this is known — is to help you reverse the troubles caused by PPI against yourself. This is calculated with your PPI’s base value.
You have a £3000 PPI
Plus, you have a £1975 APR total for five years.
Plus, you have 8% compensation from PPI, which based on this example is equivalent to £158.
£3000+ £1975 + £158 = £5133.