Big banks off the pace on loans

uSwitch.com found that taking out an HSBC loan could cost more than £1,000 extra in interest compared to the same loan from a different lender, such as Direct Line.

Overall, there are 13 lenders offering customers personal loans with a rate of six per cent annual percentage rate (APR) or less.

Nick White, head of personal finance at uSwitch.com, said: “For anyone considering taking out a personal loan – to consolidate existing expensive debts, to buy a new car or finance a home improvement – now really is a good time to utilise such low rates of interest.”

He concluding by saying that though the low costs are sustainable in the short term, in the long term bad selling practices, a resulting industry crackdown and high payment protection insurance (PPI) costs could bring prices for personal loans back up.

David Mond, CEO of Debt resolution company ClearDebt, said: “For those who are having difficulty repaying debt, switching loans to a low cost provider can make sense, if it’s practical and if the individual’s credit rating can stand it. But, take out the minimum you need to switch the debt – not a penny more.”