New research from financial information company, Moneyfacts, has shown that borrowers are to face rising repayment terms on their personal loans which will leave many people with a financial headache.

Lenders were seen to be pushing up certain rates during April 2008, with Barclaycard rising 0.5 per cent and NatWest increasing by 2.5 per cent.

These actions from the high street banks were aimed at helping to support profits in response to the global credit crunch.

Expert analyst at Moneyfacts, Michelle Slade said, "It's not only mortgage rates that continue to increase, so too have the rates and monthly repayments on personal loans. Since the beginning of the year more than half of lenders offering personal loans have made changes to their rates."

This was evident when Black Horse increased their rates for borrowers wishing to take out smaller loans, by almost 11 percentage points. This helped to add £52.68 in additional interest on a loan of £1,000 paid over one year.

Larger loans also saw a change as NatWest increased their rates by 1.5 percentage points on a £25,000 loan over five years. This added £1,015.20 in interest to the total overall cost.

Despite these hike in rates, there were still some good deals available to customers who were able to shop around for them. Moneyback Bank, Yorkshire Bank, Britannia Building Society and Clydesdale Bank also reduced some of their selected rates at the beginning of 2008. Customers, for example, who took out a loan of £5,000 with Clydesdale Bank or Yorkshire Bank, would have seen a reduction of as much as 7 per cent on particular rates.

Moneyfacts experts say it is worth bearing in mind that smaller loans actually cost the customer more in interest and highlighted Black Horse as an example of this. They charge 27.9 per cent on a £1,000 loan over one year, but only 16.9 per cent on a £7,500 loan over five years.

They also warned borrowers wanting to reduce their outgoings to think about avoiding Payment Protection Insurance from their loan provider. This type of cover has been investigated by the Financial Services Authority, which acts as regulator for the City, amid allegations that policies had been incorrectly sold to customers and that people were unable to make claims due to terms and conditions of the cover.

Payment Protection Insurance (PPI) is also said to have one of the poorest payout records in the industry, which is emphasised when compared to car insurance figures. PPI has a settlement record of just 20 per cent in comparison to car insurance's 80 per cent.

Payment Protection Insurance can cost as much as £20 for every £100 of a monthly mortgage repayment with a loan provider. This for example, means a £10,000 loan at a rate of 6.9 per cent with Yourpersonalloan.co.uk, would see the customer paying back £236.32 a month if they had taken out a policy, but only £196.56 a month without the cover.

Moneyfacts advise that if borrowers want to take out PPI, to use a firm who offer it independently as they can be as much as 50 per cent cheaper than loan providers.