How does the scrappage charge help small businesses?

In 2009’s Budget, the Chancellor, Alistair Darling, announced a new ‘car scrappage’ scheme designed to encourage motorists to buy new cars. The scheme started on the 18th May and is available to the first 300,000 eligible claimants or until the end of February 2010, depending on which comes first. The incentive works by the Government and a number of new car manufacturers offering £2000 towards the cost of a new vehicle.

In order for an old vehicle to qualify as eligible as part of the process, it must have been registered on or before the 31st August 1999 and be a small car or van, weighing up to 3,500 kg. In addition, it must have a current tax disc or an MOT certificate and a registration certificate that bears the same address that the new vehicle will have. The vehicles to be bought under this scheme also have to comply with a number of strictures: it too must be a small van or car, weighing up to 3,500 kg. It must also be registered in the UK on after the 19th May 2009 and it must be declared as new at its first registration, i.e. it must have no former owners.

In the first 4 weeks since the scheme was brought into play, the Newcastle Benfield Motor Group has reported a rise in weekly sales of up to 40%. This translates as orders for 60,000 new cars and vans. Before the scheme was introduced, the same dealership reported consistent falls of new car-sales of up to 10%. The scheme has worked for large businesses too, such as Nissan who announced that they would be recruiting a further 100 staff to help them achieve their target of 18,000 new cars and vans through June and September.

The ripple-effect of the scheme for small businesses is easy to see: where new cars and vans might have seemed previously unaffordable, given the current economic climate, the ‘cash back’ incentive can suddenly make a new car or van much more achievable which, in turn helps to regenerate the economy. But are there further benefits for those buying new vehicles, such as cheap car or van insurance?

Insurers tend to look at new vehicles with a jaundiced eye; a new van, for example, might be driven at greater speeds because it offers a more powerful engine. However, with a good driving history and a track record of always paying your commercial van insurance on time, those looking to take advantage of the scrappage scheme may be able to find cheap van insurance. Of course, the best method is always to shop around but, by adhering to certain steps, such as enhancing your vehicles security, paying your premiums annually and in full and parking in a garage at night, van-drivers can have their diligence rewarded through cheap van insurance.

The scrappage scheme has just under a year to run before we are able to fully appraise its success, but the early signs are that it offers a good deal for drivers and, in turn, a good deal for small businesses which can only help the economic tide to turn.

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