Banks have been easing in big increases in the cost of personal loans. Within the last month several loans companies have increased their headline interest rates by at least 1% making the headline rates over 9%. This is happening despite the Bank of England holding its base rate at 0.5%.

The average headline rate on personal loan is now 9.07% - but remember if you have any level of distress in your credit history, the rate you’d be offered would be considerably higher. Indeed, at the moment, more people are being absolutely refused a loan than are receiving an offer.

If you want a loan of up to £10,000, then our advice is try to get an unsecured loan. However, the odds are that you will only be offered anything over £7,500 as a secured loan – that means that if you were to default on the repayments, the lender has a legal entitlement to sell your home to obtain the monies to repay the loan. So if you are tempted by a secured loan think long and hard about the potential repercussions.

Of course, if you don’t own your own home you wouldn’t qualify for a secured loan anyway – it would be an unsecured loan or nothing!