Nick White, head of personal finance at the price comparison website, said that the First Direct cashback deal could in fact cost borrowers who repay their loan early.
“In monetary terms, on a £10,000 loan taken out over five years, the borrower could expect to get just £267.86 cashback at the end of the term, that’s just £4.46 per month,” said Mr White.
“However, for many people this ‘incentive’ is irrelevant.”
First Direct’s deal claims to reduce the loan APR from 6.9 per cent to a best buy rate of 5.3 per cent APR and is only open to existing customers.
Yet for those who repay their loan early – and Mr White said that this is common – it could cost money.
With other loans offering similar rates but offering early repayments, Mr White urged borrowers to shop around.