Personal loans 'still a good option'

Tighter lending conditions do not necessarily mean that borrowers are unlikely to be able to get a cheap loan, one expert has claimed.

Rachel Lacey, editor of personal finance magazine Moneywise, believes there are plenty of good offers on the market, despite fears that a cheap loan will be harder to come by this year.

"The rates are still looking reasonably good - you can easily get something under seven per cent," said Ms Lacey.

"It's not hard to get something under seven per cent - 6.5 per cent to 6.8 per cent is entirely reasonable, and that's a good rate, but … it's going to be harder to get those."

She added that for many of these deals, people make the mistake of only looking at the headline rates, which are sometimes just "typical rates for the best applicants".

The comments come following last week's advice from Abbey that people should spend more time working on their "financial fitness" during the course of this year.

Nici Audlham-Gardiner, head of mortgages at the bank, pointed to mortgages as one area in which people could sharpen up in 2008.

She claimed that by taking the time to understand their rates and when they expire, they will be better equipped to shop around for a better deal.