It’s been a great temptation for many car buyers to take advantage of the scrappage allowance scheme introduced by the government this year. The Scrappage Allowance / Vehicle Discount Scheme is a £300 million scheme which has been introduced by the UK government during the 2009 budget which involves the scrapping of a car or small van which is over 10 years old. The government is offering a £1000 incentive which will be matched by participating manufacturer’s dealers . The discount is deducted from the price you pay for the new vehicle.

Tempted and willing to research I had a look at the offers from Ford and found some interesting figures, they’re offering a £2K government scrappage amount and they’re going to match it, which sounds amazing, but that’s for a Style at £12,295 after reductions, then another £1,892 as a fee for the credit which stands at a whopping 7.9 APR. Suddenly the offer isn’t quite so tempting.

And there are caveats: The vehicle must only be first registered on or prior to 31 August 1999 and the owner must have owned the vehicle continuously for at least one year prior to the order date of the new vehicle.
The scrapped vehicle should have a UK address on the registration certificate (V5C) and has either a current tax disc and current MOT certificate, or has a current tax disc and a current Hackney Carriage Licence, or has an MOT certificate which expired no earlier than 14 days before the date of the contract for a new vehicle.
Neither vehicle (scrappage or new) should exceed 3.5 tonnes.
The purchased vehicle must be first registered in the UK on or after 18 May 2009 and have no former keepers.
The registered keeper of the new vehicle must be identical to the registered keeper of the vehicle to be scrapped. The Scrappage Allowance will be payable in relation to the first 300,000 new vehicles purchased nationwide or until 28 February 2010, whichever is sooner.

My reservations were repealed by the more promising offers with Kia, a subsidiary of Hyundai , where you can get a Picanto for a mere £4,495 on the road with a £2,000 combined saving with the new incentive. As a cash purchaser with no ridiculous APR to pay on a credit agreement, you’d actually be making a reasonable purchase for a new car, though it should be borne in mind that a car decreases in value rapidly for those first days of ownership and then drops to it’s usual steadier decline, but with a sensible road tax bracket, great fuel economy, low insurance grouping of 2, 3 or 4 and all around nippy features, perhaps many of the savings are to be made later. You could also look at the Fiat Eco at £5,995 and Peugeot 107 Urban Lite from £6,945.

It’s only a true saving if you don’t pay the hiked credit/ finance fees and interest rates.

Tags: car, dealerships, government incentive, Savings, scrappage allowance, vehicle