Consumers must be aware of the terms and condition of a personal loan before making a firm commitment, it has been advised.
According to Needanadviser.com, reading the small print is vital as lenders sometimes demand full payment very quickly.
However, taking out a personal loan can still be a good way of consolidating debt, especially if the loan has a good rate, said Jo Roberts, a director of the service provided by independent financial adviser Roberts Clark IFS.
She stated: "You have got to watch the terms and conditions. Be aware of when the company can ask for their money back and when you might be refused additional credit.
"Read the small print of every loan because lenders are tightening up on their criteria and the way they run their lending."
According to Halifax, January is the most popular month to take out an unsecured personal loan, probably because of the pre-Christmas spending rush.
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