Value of personal loans for cars rises due to scrappage scheme

In a clear sign that the Government's car scrappage scheme is succeeding in its mission to stimulate the motor vehicle market in the UK, Sainsbury's Finance estimates that the scrappage scheme is directly responsible for a 37% increase in the value of personal loans taken out to purchase cars in the 3 months immediately after May 18th, when the scheme was introduced, compared to the average monthly value before the scheme began.

According to Sainsbury's Finance, an estimated £61.2 million of personal loans per month have been taken out to purchase cars in the UK since May 18th, compared with a monthly average of £44.7 million in 2009 before the introduction of the scrappage scheme. The monthly average loan value is £7,515 for a car purchase.

The UK car scrappage scheme was announced in the Budget speech on April 22nd, and allows owners of cars and small vans registered before 31st August 1999 to trade them in at participating dealers for a £2,000 ‘scrappage' allowance against a brand new unregistered car or van.

Steven Baillie, Head of Loans at Sainsbury's Finance said: "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. 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 - it can make a big difference to their repayments."

Sainsbury's Finance is currently offering a personal loan rate of 8.0% APR Typical to Sainsbury's shoppers applying online with a Nectar card for loans of between £7,500 and £15,000.

Customers taking out a Sainsbury's Loan can choose to make no repayments for the first three months, receive an instant decision and have their cheque delivered to their door within 24 hours.

Sainsbury's Finance offers competitive loan rates and customers benefit from:

Repayment period, from one to seven years
Fixed repayments for the whole period of the loan
An instant personal loan decision
The money in 24 hours

For more information on Sainsbury's loans or its competitive car insurance, visit sainsburysfinance.co.uk.