Personal loans soar as car scrappage scheme succeeds

Personal loans have been taken out by more people to pay for their new car under the government car scrappage scheme.

An estimated £61.2 million worth of car loans per month have been taken out to purchase cars since the Government’s car scrappage scheme was introduced, Sainsbury’s Finance has calculated.

This represents a 37% increase in the value of personal loans taken out to purchase cars in the first three months of the scrappage scheme.

The average car loan is £7,515, Sainsbury’s has found.

The UK car scrappage scheme was announced in the Budget speech on April 22nd, and allows owners of cars and small vans registered before 31st August 1999 to trade them in at participating dealers for a £2,000 ‘scrappage’ allowance against a brand new unregistered car or van.

The scheme is clearly successful with consumers, as pointed out by Steven Baillie, Head of Loans at Sainsbury’s Finance, who said:

“Since the Government’s scheme has been introduced we have seen a sharp spike in the number of loans people are taking out in order to buy a car, which is hopefully a good sign that the motor vehicle market is coming back to life.”

“People considering buying a car, however, must remember to shop around for the best value loan they can find if this is how they decide to fund their vehicle – it can make a big difference to their repayments.”