Analysis of loan interest rates in January by The Centre for Economic and Business Research (CEBR), on behalf of Saga Money, found the average loan APR available on the high street was 3.5%, but Bank of England data revealed effective interest rates were typically 6.9%.

Saga said this suggests a “massive disparity” between the headline rates advertised prominently on the banks’ websites, and the actual interest rates paid by customers.

The report blamed the disparity on applicants having less than perfect credit scores.

It said: “Because some providers do not take into account anything other than earned income when calculating someone’s credit score, people who derive income from a variety of other sources such as pensions and investments can be adversely affected and this includes many older people.

“Often they are pushed into a riskier lending category, leaving them facing higher-than-representative interest rates.”

The research also said many loans fall outside the value range for which the most prominently advertised interest rate applies.

Advertised APRs are usually based on a loan size of between £7,500 and £10,000 because they typically take longer to pay off so lenders earn more interest.

Those who want to borrow a smaller amount tend to pay much more than the advertised APR.

Loans for £5,000 by major banks can advertise an APR as high as 13.9%.

Under Financial Conduct Authority (FCA) guidelines, the advertised APR offered on personal loans must be taken up by 51% of those who are accepted for a loan.

Gloria Barker, head of personal loans at Saga, said: “Consumer awareness of the way the personal loan market works is low.

“Over half of people are unaware that even when accepted for a loan they may be offered a higher rate than advertised and by the time they discover this they are likely to have already left a footprint on their credit record.

“More needs to be done to make people aware that the rate advertised is not the rate they will necessarily get.”