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.
The new scrappage scheme is where the government gives you a £2,000 grant towards a brand new car if you scrap a car that’s 10 or more years old.
Not all customers will lose out on the deals. Only new car buyers that take out a loan with the manufacturer to pay off the car over a number of years. Scrappage scheme participants will be loosing out because manufacturers who offer these loans that have inteerest rates as little as 4.0%, they are charging customers on the scrappage scheme up to 10% APR. This now means that it would be cheaper to sell your car on the side and get a lower APR.
Toyota is just one of the many manufacturers who are increasing the percentage rates on their loans for their customers that are part of the scrappage scheme. Toyota has a range of deals available with percentage rates between.9 and 5.9%, due down to the length of the loan. However, they are choosing to only offer a 8.9% rate to new car buyers on the car scrappage scheme. This means that if you were to buy a new T2 Avensis from Toyota, with the scrappage scheme you would pay £14,565, but after the loan has been re-payed you would have payed £17,264 which is almost £700 more than the retail price.
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 your car as part of the scheme, you have to settle with the 7.9 APR that they are offering. Seat seems to be the worst of them all, they normally offer loans with a 0 APR, however, if you are part of the scrappage scheme they will force you to have an 8.9 APR.
This problem has come about because the scrappage scheme has been funded half by the government, and the other half by the car manufacturers. This has resulted in an increase in percentage rates to make sure that the car manufacturers don’t loose any money.
It sounds like it’s starting to make more sense to sell your old car privately and don’t take part in the governments scheme. However, there are a range of alternatives to buying a brand new 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.
