Scrap your banger for a small car bargain

The car scrappage scheme launched this week will benefit small car buyers and the government but it's not the best option for everyone, says Which? Car.

Consumers most likely to benefit from the £2,000 incentive are those who are buying a small car - such as a city car or supermini - as the scheme will deliver at least a 20% discount if the car's list price is £10,000 or less.

Which? Car has found five great-value scrappage deals for less than £5,000 which offer better discounts of around 30%:

Kia Picanto. The cheapest scrappage deal in the UK right now remains Kia's official offer on the entry-level Picanto, which can be yours for just £4,195 (32% off).

Suzuki Alto. Suzuki's cheap-as-chips city car is normally priced at £6,795 (1.0 Alto SZ2). Under the scrappage scheme, you can buy it for £4,795 (29% off).

VW Fox. VW's city car is basic but with £2,000 off the cheapest Fox 1.2 3dr model, it could be on your drive for just £4,845 (29% off).

Fiat Panda. Fiat is offering an additional £100 saving on top of the usual £2,000 scrappage incentive, taking the list price of the Fiat Panda 1.1 Active ECO down from £7,095 to £4,995 (30% off).

Hyundai i10. Hyundai is offering a similar £2,100 deal on the i10 1.2 Classic city car, taking its price down to £4,995 (30% off).

Some manufacturers have responded to the scheme by offering bigger total discounts on larger cars - you can save £4,500 on a Ford Mondeo under Ford's ‘Scrappage Plus' system, for example. But for people looking to buy bigger, more expensive cars, a £2,000 discount is relatively smaller, so buying second-hand may actually be better value.

The government could gain financially from the car scrappage scheme as the VAT it takes will probably be greater than the £300m it's putting aside to fund the scheme.

Richard Headland, Editor, Which? Car, says: "Don't assume just because you're getting £2k off a new car, you're getting a good deal. On cars less than £10k, you probably are. On more expensive cars, shop around for a bigger scrappage discount or check if buying second-hand is cheaper. If so, it may pay to sell your old banger instead of scrapping it."