Payment protection - is it worth it? - Introduction

If you take out finance on your new car, you're likely to be offered payment protection insurance (PPI) to cover your loan payments if you fall sick or lose your job. The chances are, you'll be sold the PPI incorrectly. It's also likely that you could get a much better deal buying PPI from someone other than a car dealer.

A What Car? investigation found that some dealerships are not paying enough attention to official guidelines, and are mistakenly misselling PPI policies by failing to check customers are eligible, or that the policy is suitable. We also found that some dealers were charging over the odds for policies, with premiums pushing up monthly payments by as much as 21%.

Complaints about PPI policies to the Financial Ombudsman Service have almost doubled since 2004. 'Some complaints arise when people try to claim on a PPI policy and realise it won't pay out,' says Ombudsman spokesperson Emma Parker. 'Other people have been sold a policy that they could never have claimed on, or have been led to believe they wouldn't get the loan without this cover.'