How to Calculate a PPI Refund

If you have taken out payment protection insurance (PPI) on your loan, you may be able to reclaim any money spent, especially if you were improperly sold the policy. Many banks in the United States were found guilty of selling such policies without fully explaining their details to the borrower. Other loan issuers claimed that such policies were mandatory, when in fact they were not. In addition to the money you spent on the policy's payments, you may also claim an additional interest payment on the money owed to you.


Step 1

Calculate the cost of your loan each month, excluding any payments on payment protection insurance. Any payments towards PPI are often hidden from the monthly payments of your loan. You will first need to obtain the APR of the loan, plus the original loan amount. Divide the APR by 12, and multiply the outstanding balance each month by this amount.

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Step 2

Add up the monthly cost of your loan. This cost is the monthly interest during the loan's lifetime. When you have obtained a total, add this to the loan's principal. So, for example, if you took out a $5,000 loan and the total interest paid was $1,000, you should arrive at a total of $6,000.


Step 3

Obtain the actual amount spent on repaying the loan. You can obtain this information from your monthly statements. Add up each monthly payment on the policy during the lifetime of the loan. Then, subtract the cost of the loan obtained in step two from the total amount spent on repaying it. The remainder is the amount you spent on PPI payments, and is the amount you can reclaim from the loan issuer.