Car scrappage scheme – Is it worth it?

We’ve all heard of the government’s scrappage scheme where you can get a minimum of £2000 off the sale of a new car. Originally planned to end this month (February 2010), the scheme has now been extended until the end of March 2010.

Is the car scrappage scheme a good deal?

Well to qualify for the scrappage scheme, you must’ve owned the car for at least a year and the car itself must be 10 years old or more. The discounted vehicle only applies to a car or small van that has been bought new with no previous owners. The first thing that strikes me is that although you are getting £2000 off the vehicle as soon as you drive it off the forecourt you lose £2000. So if the vehicle you purchase is £5000 including the £2000 discount, once you drive the vehicle home the value of the car is now only £3000, but if you forget the discount the car is then worth £7000, you drive it home and it’s worth £5000.

Either way you still lose out, there are so many people with old bangers who have seen this as a good deal and dived in straight away. The chances were they didn’t need a new car anyway and with banks restricting loans, most new car owners have been forced into a credit agreement with the car manufacturer. So if you bought a £5000 car and have to arrange finance for it, you could pay back a minimum of £1500 in just interest only.

I understand the government introduced the car scrappage scheme to encourage drivers to get newer and more energy efficient cars but also encourage us to spend our way out of a recession. But the majority of people who have been bought into this deal have said they made the wrong decision. Many of these people now have a loan that they didn’t have previously and would’ve been better off with their older car that had no problems and was running efficiently.

Many forums are still debating over whether you actually save any money by scrapping your old car on the government’s scheme or if you’d be better off buying a nearly new car. As the government scrappage scheme will only be running for another month (or two including this one), it’ll soon blow over. The only thing that gets too me is all the budget cars on the road now, they seem to be taking over!