People are always eager to learn how much compensation they may be due from a PPI claim if successful. Using our PPI claims calculator allows you to estimate how much you could receive if your claim is paid out.
It's worth mentioning that working out an exact amount of redress may take a lot longer as there are varying elements you need to take account of depending on the type of finance product it is. Each type, whether its a loan, mortgage, credit card or other will have its own intricacies, however, there are some basic calculations that can be applied to all types of financial products to estimate the amount of redress due.
These three basic calculations below are applied when working out a PPI refund value, so you can begin to understand how our PPI claims calculator works. Their complexity demonstrates how the figure is only an estimation.
- The total PPI policy premium figure
This is the amount of money you paid for PPI. For example, if you had a loan of £5,000, the PPI policy could have been 20% of that, equating to £1000. This means the total loan amount is £6,000 including the PPI premium. This may have been paid in full or in monthly instalments with the loan.
- Interest on the PPI policy amount
This figure includes how much interest was added each month on top of the PPI. If the PPI policy is £1,000 on a £5,000 loan across five years, at 7.9% annual interest. The PPI interest is calculated at £79 per year. Across five years, this equated to £395 interest on the PPI policy.
- Statutory interest for all PPI claims
The statutory interest rate is added as compensation because you have been deprived you of your money by the bank or other finance provider. The statutory rate is currently 8% however, prior to April 1993, it was 15%. Assuming that the loan was after April 1993, the compensation is 8% a year on the combined PPI premium and interest from the time they were paid.
However, it should be noted that this is the very basic formula for understanding PPI claim calculations.
To help you understand the logistics and algorithm behind our claims calculator, we have illustrated 2 worked examples user each calculator below.
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Loan and Mortgage PPI Example:
Loan Amount: £5000 over 5 years (60 months) at 5% APR.
PPI on loan: £1000 (PPI policies vary in cost. It is often 20%, i.e. 20% of £5000 = £1000.)
Cost of PPI
On top of the mis sold PPI amount you are entitled to the interest paid.
£1000 x 5% x 5 years = £250 for 5 years (60 months)
Please note that on any successful mis sold PPI reclaims you are also entitled to 8% statutory interest compensation from the lenders per annum.
£250 x 8% = £20
Total PPI Refund Due:
£1000 PPI Amount
£250 Interest charged on PPI over 5 years
£20 PPI compensation (8%)
Total = £1270 Reclaimable PPI on Loan
Credit Card PPI Example:
Credit Card Amount: £1000 average monthly balance over 5 years (60 months)
Cost of PPI
£10 PPI charged on £1000 average outstanding monthly balance.
PPI charged is assumed at £1 for every £100 outstanding monthly balance.
Total PPI Refund Due:
£10 x 60 months = £600 for 5 years
Total = £600 PLUS statutory interest at 8% per year
e.g 1 year = £48 interest
5 years = £240 interest (48 X 5)
£600 + £240 = £840 (total)
Our calculator adds 8% of the total (£600) for the number of years since the card was taken out.