Personal loan borrowers typically pay double the APR advertised online,a joint report from personal loans company Nava and business management consultant Cebr as found.

The average advertised personal loan rate is 3.5%, however Bank of England data shows new personal loans typically cost 6.9%, The Perfect Borrower? report found.

Abhai Rajguru, co-founder of Nava Loans, said: “Many borrowers feel misled by the way established lenders advertise their loan rates. Representative ‘teaser’ APRs are seen by many as a useful tool to compare loans.

“However, in practice, they aren’t working for consumers.

“Instead they are used by lenders to market products and set unrealistic expectations on pricing which can have a negative impact when people apply and don’t get the APR were led to believe they would.

“Rather than helping borrowers to make decisions, it’s hindering them by creating a lack of clarity which leads to confusion.”

Three quarters of borrowers not given advertised APRs feel misled by lenders.

Scott Corfe, director at Cebr, said: “The reality is that lenders only have to offer advertised deals to 51% of successful applicants.

“Ultimately, lack of transparency about interest rates can undermine trust in financial services, and our research shows about a quarter of households feeling more negative about taking on credit than 10 years ago.”