Jo Roberts, director at Needanadviser, reported that in recent months the availability of cheap personal loans has diminished. The fall in cheap loans was attributed to the continuing impact of the credit crunch as money lenders begin to take steps to ensure that those who borrow money from them will be able to afford to make repayments.

She said: "Lenders are running scared of the credit crunch. We have not seen such a large [rate] rise in secured loans because lenders are now looking to get their money back. But what is happening with unsecured loans is that people have overextended themselves with credit and the loans that will end up not being repaid if the person goes bankrupt are the unsecured ones, which are generally the smaller ones. The trend is for lenders to put their rates up so it makes it worth while for them [to risk lending the money]. This is all the result of the credit problems going on in the world at the moment."

Following on from increases in loan repayments, it is may be possible that consumers develop problems in meeting other areas of financial demand. Such constraints could include credit and store cards, grocery and household bills and mortgage costs.

Ms Roberts went on to report that interest rates on personal loans are due to increase for at least the next year as a result of widespread economic uncertainty and dramatic volatility in the stock markets. The Needanadviser director also pointed out that people are wary across the globe - but particularly so in the United States - of financial news. However, she claimed that in time rates are set to slowdown and settle from their current "knee jerk reaction" state.

Those who are able to secure a loan, meanwhile, were advised to take the time to make sure that they have a comprehensive knowledge of the terms and conditions to their lending. She cited the recent case of Egg where the credit card provider reduced the borrowing allowance for its consumers on almost an overnight basis, a move it was claimed the provider was completely entitled to do as it was include in the contract its consumers received.

Checking the terms of borrowing was stated to be particularly important for those taking a debt consolidation loan. Ms Roberts claimed that this can be a "good idea" if people are able to merge numerous financial constraints into a lower rate monthly repayment, however, reading the paperwork before signing the dotted line was recommended. It was claimed that most money lenders can demand repayments and refuse to issue any additional credit if they so wish.

With interest rates predicted to continually rise over the coming year, those looking to supplement their spending may be advised to act as soon as possible and take out a cheap loan. By getting a low-cost personal loan borrowers could be able to pay off numerous monetary constraints and make major purchases, leaving them with an affordable level of repayment. Earlier this month, Moneyfacts analyst Michelle Slade pointed out that the average personal loan is currently 4.6 per cent more expensive now than in March 2007.