HSBC loan is ‘phantom offer’ for many

The cashback offer has the potential of cutting an APR from 6.9 per cent to a far more impressive 5.3 per cent.

But, according to Nick White, uSwitch’s head of personal finance, the fact that the cashback is only paid if the loan runs for its full term means that any borrower who wants to pay back their loan early will not benefit.

He commented: “It seems clear that HSBC’s rationale for introducing this novel offer is to discourage early repayment and offer ‘loyal’ customers better rates.

“However, anyone thinking about taking out this loan should think about whether they are really likely to benefit from the end-of-term rebate, or whether they would be better off with an alternative product that offers a lower standard rate and lower early settlement fees.”

It is another warning that consumers should be wary of financial product incentives that may not be as good as they first appear and could ultimately lead to more debt.