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Scrappage scheme sees loan values rise

Scrappage scheme sees loan values rise

Category: Loans

Updated: 27/08/2010
First Published: 29/10/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
A rise in the value of personal loans being taken out in recent months has been attributed to the success of the Government's car scrappage scheme.

Sainsbury's Finance estimates that, during the three months following the scheme's introduction on 18 May, the initiative has been directly responsible for a 37% increase in the value of personal loans taken out to purchase cars.

Around £61 million of loans have been agreed with a view to buying a new vehicle since the scheme's inception, compared with a monthly average of £44.7 million seen during the first five months of 2009.

The UK car scrappage scheme allows owners of cars and small vans registered before 31 August 1999 to trade them in at participating dealers for a £2,000 scrappage allowance against a brand new unregistered car or van.

"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," said Steven Baillie, head of loans at Sainsbury's Finance.

"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, as it can make a big difference to their repayments."

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