Reviewing the new loan, the website noted that competition appears to be returning to the market for unsecured personal loans with some lenders beginning to offer “tempting” interest rates.  This has followed the cost of personal loans reaching a peak in May this year.

Tesco has lowered its interest rates on all loans between £7,500 and £14,999, to an average of just 7.7 per cent, with repayment periods of between 12 and 120 months.

This means that borrowing £7,500 over 36 months would mean monthly repayments of £233.20, with a total sum of £8,395.20 to repay. Borrowing the maximum available sum of £14,999 over 60 months would lead to monthly repayments of £299.73 and a total sum to repay of £17,983.80. In both instances, interest rates are calculated daily.

Moneysupermarket.com noted that with no set up charges and fixed monthly payments, personal loans of this nature offer security when it comes to knowing exactly what repayments will be, making it easier to budget for them.

All such payments would take place monthly by direct debit, with the first taking place one month after the issuing of the loan. There is however the option to defer payments for the first two months, making the third month after payment of the loan the first month that a repayment is due.

Unfortunately, people with bad credit will have difficulty accessing these interest rates – and it should be noted that these personal loans are only on offer until 10 November. Furthermore, early repayment will mean two months additional interest are liable to be charged.

However, Moneysupermarket.com said that the loans still represented excellent value for anyone looking to borrow money for a new car or for home improvements.

Mr Baillie pointed to recent research carried out by Moneyfacts.co.uk which found that such a sum could be saved by borrowers seeking personal loans of £10,000, provided they looked carefully for the best deals. “Ultimately, you must make sure you’re getting the best possible rate for your requirements and not paying over the odds, because you don’t have to,” he said.

Mr Baillie’s own lender is currently offering customers unsecured personal loans of between £7,500 and £14,999 at the rate of 7.8 per cent APR. He noted that a good value loan such as this would definitely “come in handy” for large purchases, home improvements and debt consolidation.

Another good deal on unsecured personal loans has been unveiled recently by Nationwide, although potential borrowers require a current account with the building society to access it.

From 7 September, Nationwide current account-holders will have greater eligibility for personal loans with an average APR of 7.7 per cent. These loans will also be available to any customer who has a FlexAccount as a secondary account but who transfers their primary savings to the lender.

Nationwide is now offering the new deal on personal loans between £7,500 and £14,999 to coincide with the release of the new car registration. The building society hopes that many customers will take the opportunity to buy a new car and will require a cheap loan in order to do so.

According to the group’s research, there has been almost no drop in the number of people taking out personal loans from 2009 levels. Between 2007 and last year there was a 47 per cent increase in the number of people taking out such loans for home improvement purposes.

Since the UK property market suffered near-collapse in the wake of the credit crunch in late 2007, Sainsbury’s Finance suggested that the increase of personal loans earmarked for home improvements could indicate that people are wary of moving home right now, and are prioritising making their existing home more habitable instead. It pointed out that back in 2007 only 14.1 per cent of unsecured personal loans were for home improvements, because people were more generally focused on buying and selling properties instead.

Sainsbury’s Finance head of loans Steven Baillie commented: “Some recent reports indicate that many Britons are delaying buying major items at the moment, but our figures indicate that when it comes to our homes, improving them is the exception, perhaps because despite increasing positivity in the housing market, many may still be choosing to improve rather than move. If people do decide that they need a loan to pay for their home improvements, they should make sure they look around for the best rates on the market, which could save them a considerable amount in repayments.”

The company’s spokeswoman Rachael Mason said that as long as credit cards are used in a sensible way, then there is no harm in taking advantage of their convenience. This was especially said to be the case when it comes to repairing bad credit.

A poor credit rating is one of the main factors that stops people from getting the best deals on unsecured personal loans. Bad credit loans are available, as are payday loans, but of course the lowest interest rates on personal loans are only available to people with a good credit history.

Ms Mason said: “If you use these credit cards sensibly, there is no harm in taking advantage of some of the offers. They can be really useful for balance transfers – and large purchases.”

However, she did stress that – as with all borrowing – it was essential for customers not to borrow more than they could personally afford to repay, and to use credit cards for special purchases only. ”Many people see these cards as free money and start using them for everyday spending and find they are going over the 0 per cent period and being hit hard by high interest rates,” she said.

However, the expert did point out the need for consumers to not borrow too much money when using credit cards as part of their money management.

The Fair Investment Company’s advice follows a previous report by price comparison website moneysupermarket.com, which indicated greater competition in the credit card market, with a record number of interest-free promotional periods.

At the very least, these people will find themselves saddled with a bad credit rating and a financial headache. In the worst possible cases, they can even lose their homes or other valued assets.

Recently, myfinances.co.uk published a guide on how to assess whether you are in serious financial difficulties, and how to help struggling debtors get their finances back under control.

One key sign of trouble is when a debtor consistently extends and exceeds their overdraft, it said. Although most banks do not charge for entering an agreed overdraft limit, a hefty charge and punitive interest rate will be levied for exceeding the limit – or entering an unauthorised overdraft in the first place.

Another sign is if creditors are constantly harassing a debtor with letters and phone calls, particularly communications mentioning “final demands” on credit card bills and personal loans. With the latter, failure to maintain payments not only leads to the accrual of more interest, but late payment fees – all of which mount up and lead to more trouble later on.

The website recommended seeking debt advice as soon as possible when problems become apparent. Another possibility is taking out a debt consolidation loan, to help pay off smaller outstanding debts or high interest credit card bills, while consolidating the remaining debts into a single manageable monthly payment.

A survey carried out for the group by pollsters YouGov found 68 per cent of people believed that it was up to the Government to protect the public from unscrupulous doorstep lenders and loan sharks who can charge people 2,500 per cent or more on a personal loan. Compass said that some arrangements for personal loans were no more than “legal loan sharking” and called for controls to be placed on loan interest rates – just as is planned for credit and store cards.

The survey also found that people wanted more controls on other forms of credit, such as payday loans and pawnbroking. Furthermore, 69 per cent of respondents wanted more government support for credit sources such as credit unions.

Compass general secretary Gavin Hayes told BBC News: “The public feel that just capping excessive credit and store card rates falls short. They want caps on the cost of credit to cover the whole of the unsecured credit sector that causes so much misery for thousands of people in the UK that can least afford it.”

“This is a key test of the coalition government’s stated commitment to create a fairer society. Now we need to see if it backs the people or the financiers.”

Earlier this month, the Consumer Focus group published research estimating that 1.2 million people in the UK took out payday loans every year, with a total value of £1.2 billion. A coalition of pressure groups, MPs and other interested parties – including Compass – have now signed up to the End Legal Loan Sharking campaign.

The BBA said that the high street banks approved only 33,700 home loans in July. This caused the annual rate of decline to increase to 18.5 per cent.

It said that tougher lending conditions and reduced demand for mortgages had pushed home loan approvals down. This was despite recent calls by government and consumer groups to increase lending.

The July figure is significantly lower than the previous month’s approvals figure of 34,600 and even more below the historic average of 59,000. In July this year total net mortgage lending was just £2 billion, around half the £4.1 billion average that has pertained since the beginning of this millennium.

The report also said that there had been reduced demand for other forms of personal credit, such as unsecured personal loans, due to reduced spending levels on the high street. It said that overall demand for credit had decreased over 2010 by 2.2 per cent.

BBA statistics director, David Dooks said: “Consumer credit outstanding continues to reflect high repayments together with pressure on household finances and job uncertainty while companies are tending to retrench and reduce their bank borrowing.”

The only good news in the BBA report was the fact that annual growth in home loans being offered by the major banks stands at 4.1 per cent, which is far higher than the 0.9 per cent recorded for the market as a whole in June.

“Gross mortgage lending remains stable, although demand for mortgages continues to be subdued. The greater availability of properties for sale and slowing house price growth have not yet fed through to increased house purchase approvals,” commented Mr Dooks.