Cash point

Many people who take out personal loans feel they’ve been misled when they end up paying double the advertised interest rate from online lenders. A report from lending platform Nava and the Centre for Economics and Business Research reveals that the average teaser loan rate online is 3.5%. But the actual average rate paid by borrowers is 6.9%, according to the Bank of England. Lenders only have to give advertised rates to 51% of people they accept for loans. That means almost half will pay more – and those higher rates are not advertised. Andrew Hagger, from Moneycomms.co.uk, says: “Unfortunately, many people assume they will be offered the headline rate. “If you have a less-than-perfect credit record you may still be accepted, but because you are seen as a higher risk you will be charged a higher rate.” There are ways to find the cheapest products you qualify for with soft search tools, such as Match Factor from Totallymoney.com, which ranks loans according to your eligibility and lowest interest rates, and Smart Search from Moneysupermarket.com. Firms including Barclaycard and MBNA offer eligibility checkers too.