Little Miss
New Car Buyers Loose Out on Scrappage Scheme
Even though the initial car scrappage scheme idea was good, participants are loosing out on the deal because car dealers are not offering them the same low price deals that they offer to everyone else.
If you are unaware of the car scrappage scheme, it’s the new scheme by the government where you can get up to £2,000 off a new car when you scrap your old car that’s 10+ years old.
Not all new car buyers will be denied the cheap deal. Only car buyers that take out a manufacturers loan to pay for the car over a number of years. The way they will be loosing out is because the car manufacturers who offer loans that have interest rates as low as 4.0%, they are increasing their rates for scrappage scheme participants to 10% APR. This means that it can often be cheaper to sell your old car seperately and get the lower percentage loans.
Toyota is just one manufacturer that is increasing their percentage rates for their customers who are part of the scheme. Toyota has loan deals available with rates between.9 and 5.9%, due down to the length of the loan. However, they are now only offering a 8.9% rate to custoners that are taking part in the car scrappage scheme. This means that if you were buying a T2 Avensis, it would cost you £14,565 with the scrappage scheme grant, but once you pay off the loan in full, you would have ended up paying an extra £700 over the original retail price of £16,000.
Ford and Seat are 2 more manufacturers that are increasing their rates for scrappage scheme customers. When purchasing a Ford, they normally offer a 3.9 APR, but if you are buying a new car with a scrappage grant, you only get to choose from the 7.9 APR that they are offering. Seat is the worst of the lot, their standard loans offer a 0 APR, but if you are part of the scrappage scheme, you will have to take a 8.9 APR.
This problem has occured because car manufacturers are being charged half the bill of the scheme, the other half is being picked up by the government. This has resulted in an increase in percentage rates to make sure that the car manufacturers don’t loose any money.
So it seems that it would be better to sell your old car separately rather than using the scrappage scheme. However, there are alternatives to buying your own car. Contract hire is a method of owning a car that is often overlooked. By taking out a Ford lease you can get the latest cars at cheaper prices.
So before you choose to be part of the scrappage scheme, take time to consider your other options.
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