{img1 alig=left}If British motorists thought just for a second that finance deals are cheaper if they choose to buy a car under the car scrappage scheme, they were wrong. According to Parkers, several companies are charging their customers more to buy a car under the Governments ‘cash for bangers’ scheme than buying a car at its original list price.
The scrappage scheme was introduced on May 18 and it will last until February 28, 2010.
In order to qualify for the program, customers can only trade cars that were registered prior to August 21, 1999. The £2,000 incentive is equally split between the Government and the automotive companies.
Even if many customers were drawn to the idea of receiving a £2,000 discount, they will end up paying more by the time their finance agreement comes to an end. That is due to the higher finance rate which is raised between 3% and 5% when used with the scrappage incentive.
The figures did not surprise the Automobile Association. "Discounts and other offers have always tended to be offset by a higher cost somewhere else, for instance, in more normal times, the part-exchange value of the buyer's current car," a spokesman said for telegraph.co.uk.
For example, Parkers highlighted that Renault is charging 10.4 percent, which means that if you borrow money from the company to buy a 1.6 liter Grand Scenic Extreme, you will end up paying £15,094 for the car over three years, That is £99 more than the list price, even after applying the £2,000 scrappage incentive.
However, if you decide to make up the difference between the incentive and the new car price in cash, benefits are indeed easy to be seen. Nevertheless, most customers are choosing to apply for the finance program.
The scrappage scheme was introduced on May 18 and it will last until February 28, 2010.
In order to qualify for the program, customers can only trade cars that were registered prior to August 21, 1999. The £2,000 incentive is equally split between the Government and the automotive companies.
Even if many customers were drawn to the idea of receiving a £2,000 discount, they will end up paying more by the time their finance agreement comes to an end. That is due to the higher finance rate which is raised between 3% and 5% when used with the scrappage incentive.
The figures did not surprise the Automobile Association. "Discounts and other offers have always tended to be offset by a higher cost somewhere else, for instance, in more normal times, the part-exchange value of the buyer's current car," a spokesman said for telegraph.co.uk.
For example, Parkers highlighted that Renault is charging 10.4 percent, which means that if you borrow money from the company to buy a 1.6 liter Grand Scenic Extreme, you will end up paying £15,094 for the car over three years, That is £99 more than the list price, even after applying the £2,000 scrappage incentive.
However, if you decide to make up the difference between the incentive and the new car price in cash, benefits are indeed easy to be seen. Nevertheless, most customers are choosing to apply for the finance program.
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