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Although the initial idea of the car scrappage scheme was a good idea, buyers entering their scheme may be loosing out because car dealers are not giving them the same low price deals available to everyone else.

If you are unsure of what the scrappage scheme is, it’s where the government gives you a £2,000 grant to scrap your old car if it’s 10 years or older.

Not all buyers will lose out on the deal. Only ones that take out a loan with the manufacturer to pay for the car over several years. Car scrappage scheme customers will be loosing out because the car manufacturers who offer loans with rates as low as 4.0%, they are charging customers on the scrappage scheme up to 10% APR. This means that you can get a new car cheaper by selling your old car seperately and get a lower APR than go into the scrappage scheme.

Toyota is just one manufacturer that is increasing their percentage rates for their customers who are part of the scheme. Toyota has loan deals available with rates between.9 and 5.9%, due down to the length of the loan. However, they have decided now that they are only going offer an 8.9% rate to car scrappage scheme participants. This means that if you were to buy the new Toyota T2 Avensis, it would cost you £14,565 with the scheme, but once you pay off the loan, you will have payed an extra £2,699 which is almost £700 over the standard retail price.

Seat and Ford are also car manufacturers that are doing this to their customers. Ford normally offer a 3.9 APR, however, if you are buying your new car as part of the scrappage scheme, you have to take the 7.9 APR that they have to offer. Seat tends to be the worst, they normally offer a 0 APR, however, now if you are on the scrappage scheme, they will only offer you a 8.9 APR.

The reason this problem has come about is because the government has made the car manufacturers pay for half the bill of the scheme. This has left many manufacturers annoyed and having to try to find the extra cash somewhere else, and it seems that they have found where.

It now seems that it would be more beneficial to sell your car seperately rather than participating in the new scrappage scheme. However, there are a range of alternatives to buying a brand new car. Contract hire is a method of owning a car that is often overlooked. By taking out a Ford lease you can get the latest cars at cheaper prices.

So before you go out and scrap your car as part of the scrappage scheme, look into the other options that could save you some money.