The average rate of a personal loan has gone up by 40 percent in the last 5 years according to recent research.

In terms of figures, this means someone taking out a £5000 loan will expect to pay an average of 12.27 percent compared with 8.71 percent back in 2004.

This steep increase in rates comes even though the bank of England's Base rate has reached an all time low.

Andrew Hagger, of a price comparison website, said: "Whilst we all knew that loan providers were operating on much bigger margins in this post crunch period, it is quite shocking when you realise just how much the cushion has grown."

"When credit was plentiful lenders were keen to offer low rates to get high volumes of business, hopefully with the payment protection icing on the cake. Now the situation is totally different, credit is tight, bad debts are rocketing and loan providers are far more cautious but operating on a vastly increased margin."