With the new “10” car registration plates out on 1 March, many motorists will be picking up the keys to their brand new models, and driving them off the forecourt and onto the open road. But many consumers may be a little more cautious about splashing out on a brand new car in the current uncertain climate – given that household budgets are so tight. Nonetheless, if purchasing a new vehicle is something you’re planning to do at some stage, there are some pretty compelling reasons for buying sooner rather than later, as you can currently cash in on the car scrappage scheme.
Bangers for cash
The aim of the scheme, introduced by the government last May, was to boost the ailing car industry in the wake of falling sales; this has involved getting older vehicles off the road, and encouraging consumers to invest in newer, safer and greener models.
Under the incentive scheme, you can get £2,000 off the price of a new car if you trade in a vehicle more than 10 years old, provided you’ve owned it for at least a year. Half of the money is paid by the government, and half by the car-maker in question, and altogether, the government has put a total of £400m into the scheme with a limit of 400,000 vehicles that can be scrapped.
Time is running out
That said, if your old banger does fit the criteria, you need to act fast to make the most of the savings up for grabs, as the scheme is due to finish at the end of March. Originally, it was due to finish this month (February) – or earlier if the allocated funds ran out – but the Department for Business, Skills and Innovation (BSI) recently said it would allow buyers until the end of next month to take advantage.
While no extra funds are being provided, recent BSI figures show there is around £70m left of scheme funding, and the good news is, as long as all the paperwork is done before the end of March, you will be eligible – even if the cars have not been exchanged.
Get a good finance deal
If you are looking to beat the end of March deadline, you need to think carefully about how you will fund your purchase. You may be lucky enough to have sufficient savings to buy outright, but if not, you need to take the time to research the different types of finance and credit deals available.
If you can put down a hefty deposit and are able to make large monthly repayments, you could consider a hire purchase agreement with the dealer. But make sure this is financially viable option before signing up, and do the maths to work out if a leasing deal – such as personal contract purchase – will be cheaper.
Personal loans offer flexibility to car buyers and may be a better option, but bear in mind that interest rates vary widely, with the best rates going to those with the cleanest credit ratings.
Check your cover
Further to this, it’s worth taking the time to do your homework when it comes to insurance. Shop around for quotes before putting down a deposit to see how your current premium will be affected, as the cost could be significantly higher than the price you pay at present – and particularly if you currently own an old banger. The key is to check the insurance group of your chosen car to ensure it’s still affordable and within budget.