Not so long ago arranging a personal loan to suit your circumstances was fairly straightforward.

For most people their bank would be the first port of call. Providing they had a clean credit history and had a paid job of some description the bank manager would normally approve the loan, depending on the amount that they wanted to borrow of course.

Increasing competition blew the traditional model apart and now there are around 70 lenders offering personal loans, from high street banks and building societies to finance houses and supermarkets, the post office and online banks. You can use them for pretty much whatever you want, whether it's buying a new car, going on a dream holiday or paying for a wedding.

With all of this competition around you could be forgiven for thinking that it has become all too easy to borrow that extra bit of cash when you need it. But while there are plenty of lenders, the impact of the credit crunch means it is now more difficult to get your hands on the cash at a price that suits you.

Like all borrowed money a personal loan has to be repaid at some point. But unlike secured lending, lenders have no guarantee of getting their money back. So as general economic conditions deteriorate and if unemployment continues to rise, the risk of customers defaulting on payment increases. This increased risk is reflected in higher rates for everyone.

On top of this, advances in technology and in the understanding of human behaviour have led more and more lenders starting to price for risk. In layman’s terms pricing for risk is straightforward. If there is a higher risk that the applicant will not pay the loan back in full over the agreed time frame then there is a higher interest rate charged.

Lloyds TSB has recently adopted this strategy and is now restricting borrowing to existing customers. Borrowers looking for personal loans will have to apply before they know the rate that they will be offered.

That means they will be credit checked and borrowers with good credit histories will be offered the better deals.

That doesn't mean existing customers can't shop elsewhere, but too many credit checks can start to affect your credit score and whether or not you can receive a loan.

- check your credit score for yourself

Critics of Lloyds TSB's move to this pricing strategy say it makes it harder for borrowers to know the best rate they can get. But it's a trend that other providers are likely to follow as they become more protective over their balance sheets and their appetite for risk wanes.

Indeed, a similar trend can be seen in figures from the Bank of England that show although total net lending to individuals rose by £1.1bn in November last year, with credit card lending up £0.2bn, the number of other loans and advances fell by £0.6bn.

What to do if you need a personal loan

Are you absolutely sure that you need to borrow the money? More often than not savings can be made elsewhere that will increase your monthly spend.

You should draw up a budget first and make sure you can account for every penny that you normally spend and see where you can make cutbacks.

Make sure you shop around

There are plenty of providers in the market. Use our loan finder to compare the best deals and apply online.

Turkey on tick? Crackers on a credit card? Presents on a payment plan?

Ideally, we'd all have saved up well in advance for our Christmas shopping this year, but it's been a hard twelve months for many families.  The reality is that many people will look to borrow in order to make Christmas a better event.

The trouble might be, though, a portion of easy credit isn't on many Christmas menus this time round.

Whereas seasonal borrowing used to mean "just a signature here, please, Madam", it's no longer flavour of the month and you're likely to end up with a financial hangover if you go about it the wrong way.  So let's have a quick Hospital rundown of the various complications and four possible remedies...

Credit complications

The piggy bank is feeling rather light, but you don't fancy Campbell's soup on Christmas Day. If it's borrowing or nothing, what are the options?

A personal loan? Forget it - it will be difficult to get a loan just for seasonal spending.  Personal loans used to be so easy, but nowadays lenders, with their newly-discovered sense of caution, won't want to fund a recurring event.

Overdrafts might be a better a short-term way to borrow (we'll recommend a couple of bank accounts with overdrafts below).  However, one note of caution: your bank can withdraw the overdraft privilege at any time.  It's not like a loan or credit card with an agreement at the outset to repay over a steady period of time. Overdrafts are there until the bank pulls the plug, and they have a tendency to become habit: it's difficult to motivate yourself to repay it for as long as it's still available for you to dip into. Other things come up (car tax, insurance renewals), soon it's May or June and who wants to still be repaying Christmas outlay when you've a summer holiday to save your spending money for?

Credit cards remain the default option for most people's Christmas borrowing. 

That's not necessarily bad: there are some good deals to be had on credit cards.  Nevertheless, lenders are like Jekyll and Hyde at the moment – you can't be sure which side will surface next. Lately, a few of them have been putting up rates and subtly adjusting their other charges.

So, watch your step by following our four simple remedies to Christmas credit:

Don't shop on a balance transfer card

There's a simple reason why this is a bad idea: your repayments won't clear your spending until your transfer is fully paid off, meaning they cost you a lot more money over time.

This is to do with the order at which your repayments are applied to the credit card balance (the dreaded 'Negative Payment Hierarchy').  It happens because credit card lenders separate out different components of your balance and only let you repay one at a time.

How it works: suppose your balance transfer of £1,000 is locked at 0% for 12 months (good), but your purchases are at 18.9% (not so good). When you make repayments, the first debt that gets reduced is the 0% transfer.  Not a penny will go towards repaying the purchases until your 0% balance is cleared — so the purchases sit there attracting high interest for as long as it takes to pay off your balance transfer.

Nearly every lender does this trick; it's designed to squeeze more interest out of you!  The only exceptions we know of are the Nationwide credit card and the Saga credit card.

The solution?  Don't even put your balance transfer credit card into your wallet.  Cut it up and use a different credit card for shopping.

If you don't have a separate spending-only credit card, the Virgin Money Credit Card offers 3 months interest-free on purchases.

Get cashback as you shop

You might as well pocket something from your card company in exchange for putting your plastic purchases their way!

American Express offers one of the better cashback deals with its Platinum Card, which returns 5% on all purchases for the first three months. The maximum is £100 (but seeing as that involves spending £2,000, hopefully that won't cramp your style too much).

There's also the Barclaycard Cashback Visa card, paying 1% on the first £2,000 of spending.  If you're putting £500 towards Christmas, that's £5 back – not much, but better than no cashback at all, and if you use the card regularly it will soon add up over a year (maybe contributing to next year's presents!)

Compare credit cards here »

Don't go for short term credit

By this, we're talking payday loans, pawn services and cheque cashing operations.

They make a killing at this time of year, and the reason we don't recommend it is because the charge for credit is staggeringly high.  Payday loans and short term borrowing are there to bridge a cashflow gap and are best applied only to avoid a worse alternative – for example, missing a payment that would result in your utilities being cut off.

There are a few reputable companies out there but even with the best of the bunch, we'd really urge you not to consider these loans for discretionary spending.

Overdraft: get it agreed first...

There's a huge difference between the rates you pay on arranged and unarranged overdrafts – often as much as 10% in interest.  There are also charges for going overdrawn without authorisation (even though debit card payments will often let you do this by mistake).

A quick phone call to your bank manager is often all it takes to set up an agreed overdraft and avoid a nightmare of interest and charges.

Speaking of bank managers, if you're in the mood to change your account to somewhere more accommodating, you might want to consider moving to a current account that includes a formal overdraft agreement.

Compare leading accounts here »

Stall the instalments

Our final tip: if you can avoid it, don't sign up for lots of payment installment options on presents from catalogues, etc.  The repeated credit checks will leave footprints on your credit file and make it more difficult to obtain credit in the future.  Check your credit report if you're worried this might have happened already, or read our guide to improving your credit rating.

Glad tidings

If you enjoy Christmas, it's probably not that closely connected with what you've spent, so we hope you'll be wrapped up in the good tidings rather than the fabulous flourishes.

Nevertheless, it's great to make an occasion of it.  There's no worse tidings than a bill you can't afford, so if the turkey can be trimmed down to tuck in to your budget – and if crackers can be crafted at home and presents planned prudently – more power to you!  (Do share your tips in the comments below.)

And if your festive spend does need a boost, go carefully and you'll avoid financial cold turkey in 2010...

The price of used cars seems to be rising as old vehicles are scrapped to make way for new. At the same time, stocks of nearly new cars are falling – a knock on effect of the drop in new car sales in recent years.

Pendragon, Britain's biggest car dealer, recently reported it had seen a 20% increase in the average price of vehicles since January. The era of very cheap used motors seems to have passed, and it seems clear that prices will continue to climb and will remain high for a few years until the current short stocks of nearly-new cars return, following the recent return to growth in new sales.

As my wife recently passed her driving test, we now need two cars, so I'm currently in the market for a used car. I've still not decided exactly what to get, but what I do know is that things aren't always what they seem and a deal isn't always a deal.

Here's what I've found so far...

What's in vogue

It's no surprise that in this financial climate people are looking for ‘safe' options that cost very little to run, even if they're not all that exciting. Diesels are particularly popular as they're generally quite efficient and tend to be cheaper on road tax.

The result though is that you're unlikely to be able to bag a bargain. A typical 3-year-old VW Golf 2.0 TDI or Ford Focus 1.8 TDCi will be no cheaper than £6,000 to £7,000, which isn't bad but if you take a few added running costs on the chin you can potentially save quite a lot off the sale price.

What might be a bargain

Petrol models of the Golf and Focus are on average £2,000 cheaper than their diesel equivalent, and you'd have to drive a lot of miles to make that back in the cost of fuel - so always consider the mileage you expect to clock up.

Larger cars are often a good bargain too. For example, ex-fleet cars such as Mondeos and Vauxhall Vectras are generally better value than their smaller counterparts, as they're generally better equipped (sat-nav, leather seats, climate control, leather seats etc).

Better yet – and here's an option that tempts me personally – find a car that may be unpopular for aesthetic reasons. If you can get over often dodgy styling, you can find a real bargain. I'm thinking along the lines of:

	Rover 75 (fantastic engines supplied by BMW, don't forget). Good mileage models from only £1,500 when I last checked!
	Jaguar X-Type (has the chassis from a Mondeo and shares the running costs and very good reliability). Surely you can't ignore the prospect of a reliable Jaguar for £3,000?
	Vauxhall Signum (looks like a mutant giant Astra hatchback but really based on the Vectra). This car was designed to compete with the BMW 3 series, but never really caught on. As a result a 5-year old with a good diesel engine and with fewer than 60,000 miles on the clock could be as little as £5,000 which is a bargain for a family-sized car.

Always consider insurance though – when you are looking for a car make sure find out which insurance group it's in and then shop around for a good insurance quote.

Finance it yourself – and make further savings

Fortunately it's easier than it was a year or so ago to get unsecured finance at decent rates, as long as you have a good credit history. Arranging finance on your own either through your bank or by speaking to an adviser enables you to get a cash price as well, saving you perhaps an extra 5-10%.

Have you recently bought a new car? How did it work out? Or are you currently still looking for one? Let us know in the comments below.

Only recently, we mentioned just how expensive weddings are becoming for many of us.

And now it seems that in our striving to have the best wedding day possible, it is leaving us with debt that outlives marriage by 5 years!

It has been revealed that many of you loved-upped couples are waltzing up the aisle with a £20,000 ball and chain of debt strapped to your ankles, only to be marching straight to the divorce courts a meagre 11.5 years after you say I Do…

…thus leaving you paying off your nuptials long after the ink is dry on the decree absolute.

Research reveals that a whopping £467 million was borrowed in the UK back in 2005 to fund fairytale weddings and with repayments of up to £26,000, many of you are left forking out for the big day for 16.5 years; that’s 5 years longer than the average marriage lasts.

Poor credit rates and rising unemployment don’t seem to be deterring loves young dream either. Despite a national, personal debt of over £1.4billion many of you couples are continuing to splash the cash on grand weddings.

It could be said that love is blind if you are are borrowing up to £26,000 (including interest rates) to pay for your big day. That’s over £2,000 more than the UK’s national average salary.

Some would say it’s a big price to pay for a pitiful 11.5 years of marriage that your Grandparents would be ashamed of.

Read: More of us need a loan for our wedding

Paying back the loan at a recommended rate of 5% can lumber you cash strapped couples with monthly repayments of £130 or £1,560 a year.

Before the recession came along, a wedding loan was just another debt to add to the pile for a lot of us credit-happy young Brits. With huge mortgages, shiny new cars and wallets crammed with credit cards, 5% repayments were the only affordable option.

After 11.5 years when the love is lost and the divorce proceedings are well and truly underway, the marriage may be over but sadly, your repayments aren’t so easy to forget.

An outstanding balance of £8,060 is all that’s left of the wedding, which will take a further credit crunching 5 years to pay off. All of this is ludicrous when you think that a wedding certificate can be bought with the change in your back pocket; £3.50.

Read: The 10 most expensive weddings in history

Divorces are set to rocket this year as the recession tightens its grip and rows escalate over money. A third of current inquiries to solicitors by those deciding of you deciding to break the knot, are linked to the credit crunch; so much for ‘richer and poorer’!

Starting married life in debt can place a strain on your marriage and the pockets of those involved, massively reducing its chance of survival. Wedding’s don’t have to cost the earth and can be enjoyed on a budget!

Here are some ‘penny pinching, perfect wedding’ tips to make your day glamorous and affordable:

• Reduce guest numbers and have an intimate day
• Get your dress on eBay. A second-hand wedding gown has only been worn once (in theory anyway)
• Shop around for bargains and make use of talented friends who can lend you a hand
• Scrap unnecessary extras like favours or double them up as place settings
• Email your invitations out. No stamps required.

Stuart Parkin, Managing Director of Kensington Financial Management Consultants says:

“Weddings don’t have to break the bank. You can still have your perfect day without the designer price tag and strain of a loan, after all a wedding is about love and not upstaging your married friends!

By cutting back where you can you will be glad of it down the line, especially when children come in to the equation. Think of the extra cash you could have available when you want to make your house a home, take a romantic break away, enjoy dining out together or decorate baby’s room.”

And at a time when one in three marriages end in divorce, just look at what else you could have spent £26,000 on towards a happier marriage:

• £26,000 mortgage down payment
• £19,000 on a safe family car
• £15,000 on a conservatory or extra bedroom
• £10,000 on a new fitted kitchen

Naturally, all the tips come with no strings attached; unlike the loan….

So, spend wisely and enjoy your married life by not taking on too much debt!

Source © 2009 Kensington Financial Management Consultants (part of The Money Advice Group).

Redundancy may be a worry for many of you right now but it’s not necessarily the main cause of your financial woes.

The problem for many of us, is, quite simply, we don’t know where our money goes!

Rising bills and one-off payment shocks, such as having to replace a car, can be much more damaging, according to research from the Council of Mortgage Lenders (CML).

It showed that higher food and fuel costs had the biggest negative effect on our finances last year.

If you can’t work out where your money goes, this checklist should help you to identify the true cause of your cash flow crisis.

• You spend first and think about it later

Even small purchases soon add up and if you’ve racked up credit card bills or an overdraft, you need to change your ways.

Find new hobbies; try taking up a sport, spending time with your friends or joining a club or society.

When you do go shopping, try consciously asking yourself, “Do I really need this?” Only flash the plastic if the answer is a resounding, “Yes”.

• You don’t know what you owe

Sorry for the shock, but credit card debts aren’t free, even if you pay the minimum every month!

Nor is that car loan you took out three years ago or even your mobile phone contract.

What you need is an overview of the credit you’ve taken out and you’ll find it in your credit report, the personal history of your credit accounts and repayment record. You can get an Experian credit report for free with a 30-day trial of CreditExpert. It will give you a clear picture of what you owe and how you’re managing.

• Your credit history means you’re paying extra

You could be paying higher than average interest if you’ve missed payments or walked out on a loan, credit card or mortgage as this could make lenders nervous that you’ll let them down, too, and a simple clerical error on your credit report could have the same effect.

Either way, you’re likely to find it more difficult to get credit and to pay a higher rate of interest than someone with a good credit history. You should check your credit report regularly to be sure that it is accurate and up to date. If you find anything you disagree with, contact the relevant lender and ask for it to be amended straight away.

• The rising cost of living has caught you out

The CML study showed that about a quarter of British households are struggling to pay their basic bills. If the cost of living has hit you hard, you need to find ways of cutting back without missing out.

Try budget supermarkets or food value/essentials ranges, use price comparison sites to find the best deals on gas & electricity, insurance and other necessities and dump those little treats that cost so much over time, like the daily latte or the regular take-aways.

Small adjustments can help to balance your budget and relatively painlessly too.

• Your payment priorities are wrong

You need to identify which debts cost you most in interest or fees and target them first.

For example, you might want to pay off your credit card before clearing your loan.

It might also be better to consolidate several debts into a cheaper loan or to see if you can get an extension to your overdraft at a reasonable rate.

Get professional advice if you need help or ask your bank manager.

• You don’t have an emergency fund

Payments shocks, such as needing a new fridge or washing machine, could push you into debt if you don’t have an emergency fund set aside.

If you have a good credit history, you may qualify for a period of interest free credit to tide you over but you should try to save a little every month, just in case; that way, you won’t have to take an expensive deal out of desperation!

• You’ve had financial problems in the past

It’s easy to think it won’t matter if you skip a repayment occasionally…but it does.

Lenders check your credit report when you apply to them so that they can see if you’ve been a responsible borrower in the past.

If they find evidence to the contrary, you could get turned down or qualify only for expensive deals. A missed repayment stays on your credit report for at least three years, while going bankrupt or taking out an IVA are on the record for at least six years.

If special circumstances, such as an illness, explain past problems, you can add a note of explanation to your credit report.

• Your ex is haunting you

You may have split up years ago but if you shared a mortgage, bank account, credit card or loan, their credit history could still be affecting yours.

Your credit report has a section that lists the people with whom you share a financial connection. They are known as your financial associates and lenders may check their credit report as well as yours, because their position could affect your ability to honour your debts.

Remember to close joint accounts after you separate and tell the credit bureaux that you are no longer linked; Experian is the UK’s largest.

• Your ID has been stolen

Identity fraud is one of the fastest-growing crimes of the 21^st century and takes place when criminals manage to get hold of enough personal data to impersonate you, borrow money in your name, empty your accounts and max out your credit.

On average, it takes more than a year to discover you’ve been targeted, according to Experian’s dedicated Victims of Fraud team; in the meantime, you could be denied the credit you need to get by. Regular checks on your credit report allow you to spot suspicious applications and transactions and mean you can prevent problems from escalating.

• Your pay or hours have been cut

You may be frightened of losing your job but it’s more likely that your pay or hours will be cut. If it happens, don’t carry on as usual; pull out your bills and revisit your credit report to see what your fixed costs are, then draw up a realistic budget.

Read our Guide to Money Management

If you’re worried you can’t meet repayments, talk to your lenders and explain the situation. They may be able to reschedule your debts so you pay less each month or arrange a temporary payment holiday while you find new sources of income.

• You haven’t taken control of your finances

Cash flow problems are all relative; you may really have enough money but haven’t taken control of it, with the result that it slips through your fingers.

A sensible budget that allows for some treats and monthly checks on your bank and card statements will show you clearly where your money is going and remind you to stay on top of it.

Remember to check your credit report with CreditExpert;  you can get advice on how to take control of your credit rating as a part of a 30-day free trial.

So, there you go, some tips on how to spot where al your money goes.

And now you know what the problem is, you can take steps to deal with it!

© Experian/Credit Expert 2009