Rising base rates means direct lenders have to be careful in setting too tight a margin and then find they are writing business at a loss.

Economic pressures mean they continue to advertise competitive headline rates and promote hard through direct mail and on the page.

Look beyond the headlines, though, and the rates are not so competitive. Companies such as Alliance & Leicester will offer 'loans from 8.9%' but you have to borrow more than £12,500 to get that sort of rate. At a more typical motor loan of £3,500, they are charging 12.9% APR.

The Prudential-owned Egg is a new entrant into personal loans. Its launch last year was based around its generous savings rates on its current accounts and the company admits it has yet to make money. Loan rates are anything but competitive.

Lombard Direct's loan rates are competitive, particularly for lower amounts, but the premium for its payment protection insurance is high, making monthly payments more than those of companies with apparently higher rates.