unsecured personal loan

It is still possible to borrow at a low rate, but you need to know where to look. And that may mean choosing a credit card rather than a personal loan.Moneyfacts.co.uk analyst Michelle Slade points out: “It’s not only mortgage rates that continue to increase, so too have the rates and monthly repayments on personal loans.

“Since the beginning of the year, more than half of lenders offering personal loans have made changes to their rates.”For example, back in January, Black Horse charged 16.9 per cent interest to lend £1000 over 12 months. This has now leapt to 27.9 per cent.

If you want to borrow a substantial sum, such as £10,000, a personal loan may still be the cheapest way.Your Personal Loan, Moneyback Bank, Sainsbury’s Bank, Barclaycard and Tesco Personal Finance all charge less than 7.5 per cent annual interest on debts this size.

But if you are looking for a smaller amount - or have a couple of thousand of existing credit you want to transfer to a better rate - there are few cheap loan deals.Only Your Personal Loan and Barclaycard will lend £5000 at under 7.5 per cent.

And if you want just a thousand or two, rates are even less favourable.Abbey, at 7.9 per cent, is the sole lender charging in single figures for £1000 - the next lowest rate is a whopping 13.8 per cent from Barclaycard.

That’s why, particularly for smaller amounts, borrowing on a low-cost credit card can work out far cheaper.With long-term interest rates averaging 15.9 per cent, many cards are as costly as loans, but there are far better deals available.