The Bank of England’s recent interest rate cuts have not reduced the cost of unsecured borrowing, according to MoneyExpert.
Research by the financial website showed that average interest rates on unsecured loans of between £5,000 and £7,500 have edged up by as much as one per cent.
Taking out a larger unsecured loan could be the only way to avoid high interest rates, MoneyExpert founder Sean Gardner suggested.
“Lenders take the view that those borrowing more are generally a better risk than those borrowing less and offer better deals as a consequence,” he explained.
His advice to those planning on taking out a loan is to carefully research the available deals before an application is made.
YouGov research shows that tougher lending criteria employed by lenders is the main reason why some 1.38 million people have seen their loan applications turned down in the last six months.
Meanwhile, moneysupermarket.com has reported a surge in the uptake of short-term payday loans.
Since September, take-up of these loans has increased by more than 55 per cent.