It is not just mortgage rates that are being hit by the credit crunch, loan repayments are also rising and it is becoming increasingly difficult to borrow money as banks tighten up their lending criteria.

 “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,” says Sean Gardner of MoneyExpert.com.

MoneyExpert.com says that the average rates on all unsecured personal loans have increased from 10.62% in January to 11.4% at the beginning of April. Rates on balances of £2,500 have risen from 9.49% to 10.11%, while the cost of a £5,000 loan is up from an average 9.76% to 9.93%. The average cost of an £7,500 unsecured loan has risen from 8.3% to around 9.21% and the  average rate on a £10,000 unsecured loan is now 9.55%, up from 8.88% at the beginning of the year.

According to Moneyfacts.co.uk, since the beginning of the year more than half of all lenders offering personal loans have made changes to their rates. "In the last two weeks alone we have seen Barclaycard (+0.50%), Lombard Direct (+1.0%), The AA (+0.10%), NatWest (+2.50%) and Tesco Personal Finance (+0.6%) all push selected rates upwards,” says Michelle Slade, Analyst at Moneyfacts.co.uk. “On top of this Barclaycard has pulled the one time best buy product offered through its Masterloan brand.”

Moneyfacts.co.uk says Black Horse has increased rates for those looking for smaller loans by as much as 11.0%, adding £52.68 in additional interest over a year. NatWest is said to have increased rates on the largest loans by 1.5%, adding £1,015.20 to the total cost.

However MoneyExpert.com’s Sean Gardner says it is not all bad news: “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. The best way to ascertain how much you’ll pay is by comparing the market online.”

Michelle Slade of Moneyfacts.co.uk agrees there are still good deals around. “Some lenders have in fact bucked the trend and reduced rates in the last few months. Moneyback Bank, Britannia BS, Yorkshire Bank and Clydesdale Bank have all reduced selected rates since the beginning of the year. In fact anyone looking to take out a £5K loan with Yorkshire Bank or Clydesdale Bank will have seen rates reduced by as much as 7.0%.”

If you are looking for a loan one of the key things to  be aware of is the typical rate. Most lenders advertise typical rates but, for some this is the typical rate for larger loan amounts. The rate for a smaller loan may be much higher. Moneyfacts.co.uk says don’t assume the rate you see is the rate you will get. A typical rate has to be offered to at least 66% of accepted customers. This means 34% of customers may be charged a higher rate.

MoneyFacts.co.uk also advises consumers to think carefully about Payment Protection Insurance (PPI). It says taking PPI from the loan provider is often very expensive and can add thousands of pounds to your loan.

As always the answer is to shop around. Don't just assume your bank will offer you the best deal. But warns MoneyExpert.co.uk – do not be tempted to make multiple applications as these will leave a mark on your credit file which may mean you get offered a higher rate or get declined completely.