Move your loans from the Bank of Mum

There's nothing unusual about borrowing the odd £50 from family or friends, but you might draw the line at £1,000.

However, many people don't. Almost one in five of us have borrowed £1,000 or more from family, friends, colleagues or even an employer, according to research from independent financial adviser The Marketplace at Bradford & Bingley.

Given that only the most parsimonious friend would charge you for borrowing cash, it is cheaper than taking out a loan from a high street bank or building society.

On loans of £1,000, NatWest charges an annual percentage rate (APR) of 20.9, Abbey 17 per cent, and Lloyds TSB and Barclays 14.9 per cent.

Happily, better rates exist elsewhere - 6.7 per cent at Nationwide and 9.7 per cent at Bristol & West - but financial institutions tend to be stricter about repayments than, say, your mother.

The problem with relying on friends and family is that it could lead you to prolong the debt instead of making a clean break; it could also put pressure on your relationships.

If you are struggling with store and credit cards and other debts, consolidation into a more manageable monthly sum with an unsecured personal loan could be a better answer, says Michael Senior, head of lending at The MarketPlace. "But once you've consolidated your debt, it's vital to rein in those spending urges before you arrive back at square one."

A glance at our best-buy table shows how you can get a competitive rate if you look for one. Table-topping Northern Rock typically charges an APR of 5.9 for £5,000 over three years with no redemption penalties; in second place, Cahoot offers an APR of 6.2.

Always check the small print with any personal loan. Many lenders will try to entice you with an attractive headline APR but this is often a typical rate, and you end up paying more.

Watch out for penalties for repaying your loan ahead of schedule; many lenders charge an early settlement fee to cover the cost of setting up the loan.

Beware, too, that the monthly repayment figure does not include the cost of payment protection, a form of insurance to cover your repayments if you can't afford them. This can cost hundreds of extra pounds during the lifetime of a loan, so you should avoid taking it out if at all possible.

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