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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 unsure of what the scrappage scheme is, it’s where the government gives you a £2,000 grant to scrap your old car if it’s 10 years or older.

Not all buyers will lose out on the deal. Only car buyers that take out a manufacturers loan to pay for the car over a number of years. Car scrappage scheme customers will be loosing out because the car manufacturers who offer loans with rates as low as 4.0%, they are increasing their rates for scrappage scheme participants 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 manufacturer that is increasing their percentage rates for their customers who are part of the scheme. Toyota offers loan deals with annual percentage rates between.9 and 5.9%, which depends on the length of the load and the size of the deposit. However, now, they are only offer a 8.9% rate to custoners that are taking part in the car scrappage scheme. This means that is you were to buy a T2 Avensis, with the scrappage scheme it would set you back £14,565, however, once you pay off the loan you would have payed just over £17,200 which is almost £700 over the retail price.

Ford and Seat are another 2 manufacturers that are doing the same thing to scrappage scheme participants. 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 even worse, they normally offer a 0 APR, but if you apply for the scrappage scheme they will force you to have a 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 left many car manufacturers annoyed because they have to find the cash from somewhere else, which they apparently now have.

So it sounds that it would be a better deal to sell your old car seperately and not participate in the scrappage scheme. However, there are different options out there. 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 rush ahead and scrap your car for £2,000, think about the other options that are open, you could save some money.

 

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