**The PPI Refund Calculator Guide**

**How To Calculate What You Are Likely Owed From Mis-Sold PPI**

You’ve seen it on the TV and you’ve heard it on the radio: mis-sold **PPI** is the biggest banking scandal of our time. So much so that there’s a reasonably good chance you could be owed some money.

But how much?

You can use a free **PPI refund calculator** that can be found on many sites online to find out.

It’s worth knowing, though, that they can be inaccurate and misleading. Many factors influence each individual PPI calculation. It’s these ‘many factors’ that many PPI refund calculators don’t take into account.

**One of the first things you’ll need to know about your policy is:**

a) Whether it is/was a single premium policy or a monthly premium policy and

b) Whether it’s for a loan, credit card or mortgage.

**How can you find out what type of policy your PPI is?**

The easiest way is to find the original credit agreement for the loan or mortgage concerned. This will show you what type of policy you have as well as indicate the cost of the PPI.

If you can’t find your PPI account number or you’ve lost or discarded your paperwork, it need not prevent you from claiming. We’ve put together another article that explains all you need to know about **claiming PPI without account numbers or paperwork**.

Once you have the information you need by following those guidelines, you’ll be able to use the free PPI calculator process that’s outlined below.

**PPI Refund Calculator for a Single Premium Policy**

Even if you can’t find your original credit agreement, it’s still quite easy to make a fairly accurate assessment of the amount you could be awarded.

**You will need to know the following in order to get your PPI calculation amount:**

- The full amount you borrowed in the first place
- The specific terms of the loan
- The interest rate or APR payable on the loan

To show you how to calculate the appropriate figure we’ll use dummy figures. In this example, we’ll assume a £20,000 loan over a period of five years (60 months), with a typical 7.9% APR interest rate applied.

We then need to add the cost of the PPI policy which is *usually* around 25% of the loan amount. There are circumstances in which it could be considerably more, however.

So if we assume the standard amount of 25%, your total loan amount is now £25,000.

**Let’s have a look at the relevant calculations:**

**The Loan Portion**

- Loan Amount: £20,000
- Term of Loan: 60 months
- Interest Rate: 7.9%
- Interest on Loan: £7,900
- £20,000 x 7.9% = £1,580, which is the APR for 1 year / 12 months
- £1,580 x 5 = £7,900, which is the total APR for 5 years / 60 months

**The PPI Portion**

- PPI Premium: £5,000
- Interest on PPI Policy: £1,975
- £5,000 x 7.9 = £395, which is the APR for 1 year / 12 months
- £395 x 5 = £1,975 which is the total APR for 5 years / 60 months

**Total Repayable**

Total Repayable = £34,875

Using a PPI refund calculator we can see that the 7.9% APR on the £5,000 PPI policy amounts to £1,975 over the five years.

**PPI Compensation**

In addition to the PPI calculation shown above, we also need to add a further 8% to the amount which represents **PPI compensation** and which is applied per year.

This amounts to a total repayment figure of £7,765, which is the amount you should be able to reclaim.

£5,000 (PPI amount) +

£1,975 (7.9% interest x 5 years) +

£790 (£1,975 x 8% compensation x 5 years)

**= £7,765**

Please keep in mind that this is a guide to give you an indication of what you *could* be owed. But there are circumstances in which the calculations will be different.

For example, if you have paid off the loan early, the figures given above will obviously be different. In cases like this, you’ll only be able to **claim the overall PPI fees** that have been paid.

Another example where the calculations will be different is when you’re still in the process of repaying the loan. In that case, you’ll be awarded a refund for PPI fees paid *so far*.

**PPI Refund Calculator for a Monthly Premium Policy**

If you have a monthly premium policy, the amount you’ll be paying into it every month will be a fixed amount. Your annual statement will tell you how much that is.

In situations like this, the monthly fees will differ quite significantly. As such, there are no average figures that we can share with you.

To give you an idea of how vast the difference can be, we’ve seen policies as low as £9 a month. At the other end of the spectrum, we’ve seen others as high as £150 month.

**The PPI calculation in this circumstance is actually quite simple, though.**

Simply take your monthly figure and multiply it by the number of months in the loan. Then multiply by 8% to give you the compensation amount per year and you have your approximate repayment value.

**PPI Refund Calculator for Credit Cards**

Of all the PPI calculations you can make, this one is the most difficult in terms of PPI claims. Credit card balances typically vary at the point the interest is paid, which is usually at the end of the month.

A credit card PPI policy will usually charge 1% of the outstanding balance. If, for example, you have £5,000 outstanding on your credit card, you will have a further £50 added to your balance at that point (£5,000 x 1% = £50).

In addition to that, you also need to factor interest into the equation, which is usually around 20% but can sometimes be more. This will need to be factored in on a per year basis.

For the reasons mention above, it’s not possible to give average repayments. To give you an idea of how big the figure *can* get, we did have a client who was awarded almost £33,000 for one card alone.

**Get Help Calculating Your PPI Refund Amount**

Even though this PPI refund calculator guide has been presented as clearly as possible, you may find the whole process a bit daunting. Not everyone is comfortable with numbers.

To get clear, straight forward advice about your PPI refund, get in touch.

Just **pop your details into the short form above** and we will get back to you to answer your questions and chat about your potential PPI claim.

Rest assured too, that while our service can take most of the stress and tedium out of the PPI claims process for you if you want, there’s no obligation to pursue your claim further with us if you choose not to. You won’t be given the hard sell!

If you prefer to call us, you can do that for free on **0800 031 6078**. Or **click here to arrange your chat.**

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Image Credit: Tiffany Terry