Many Britons may find that their access to cheap loans is diminishing, a new report reveals.

A study carried out by MoneyExpert indicates that the average personal loan currently attracts interest of 11.4 per cent. However, at the beginning of this year this rate stood at 10.62 per cent. Such an increase comes despite the Bank of England’s monetary policy committee opting to cut the base rate of interest by 0.25 per cent in February, the price comparison website states. Research by the firm also showed that just under half (43 per cent) of loan searches carried out on the MoneyExpert website were by those deemed to have an adverse credit profile.

It was revealed that rates on personal loans worth up to 2,500 pounds have gone up by more than half a percentage point in the space of three months. Such a loan now attracts an average annual percentage rate of 10.11 per cent, a rise from previous figures of 9.49 per cent. Meanwhile, a typical loan of 5,000 pounds now charges interest of 9.93 per cent compared to 9.76 per cent at the beginning of this year. The average charges for borrowing 7,500 and 10,000 pounds respectively, meanwhile, are now shown to stand at 9.21 and 9.55 per cent.

However, the firm pointed out that Lombard Direct, Tesco Personal Loans, MoneyBack and Sainsbury’s Bank are among the money lenders which currently charge less than 7.5 per cent in annual interest on personal loans of 7,500 pounds.

Commenting on the research, Sean Gardner, chief executive of MoneyExpert, said: “Over 180,000 people consolidate their debts every month and the vast majority turn to an unsecured personal loan to help them control their finances. However lenders are wary of customers’ ability to repay what they owe so are becoming increasingly strict when it comes to choosing who they lend money to. But this should not put you off if you are looking to borrow money. There are still competitive rates out there, particularly for people with good credit records. Those in muddier waters can still borrow but may have to pay more than they would have done even three months ago.”

Mr Gardner went on to report that the most effective method for consumers to figure out how much they will have to make in loan repayments was to scour the internet to look for competitive deals.

The increase in loan rates was attributed to concerns by money lenders that customers with imperfect credit rates will be unable to make repayments on their borrowing. MoneyExpert also advised that those who are deemed to be a risk to financial providers should not expect to be able to get a loan which charges the rate of interest seen on advertisements.

For those who have had difficulties in meeting demands for payment in the past but are now confident about their ability to do so, taking out a bad credit loan could be advisable. In applying for this type of loan borrowers may find that they are able to supplement their spending effectively. Bad credit loans could be of particular assistance to those wishing to avoid insolvency. Earlier this year, a study by Grant Thornton showed that about 10,000 Britons will file for bankruptcy in each month of 2008 due to problems paying loans, credit cards and other monetary demands.

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