You may have recently read articles on Government plans to offer incentives to motorists to encourage them to scrap older cars and buy a new one.  The idea is to get older, more polluting vehicles off the road, as well as providing a much needed boost for the motor industry in the UK. It was also suggested that the Government may introduce funding through a subsidised car loan scheme to allow those looking to take advantage of the scheme the necessary finance to be able to buy a new car, without having to apply for a more expensive personal loan or car loan.

Alistair Darling announced the launch of the scheme last week in his budget speech and according to the credit reference agency Experian, there are somewhere in the region of 7.1 million vehicles which will qualify for the scheme, of which it is expected that around 1.5 million drivers of older cars will take advantage of the chance of a new vehicle.

The scrapping scheme offers car owners who qualify, £2,000 off the price of a brand new car, £1,000 of which will come from the Government and the other £1,000 from the car manufacturer. So far there has been no further mention of the availability of the subsidised cheap loan scheme to help people buy the new car.

Of course many individuals will not be fooled by this latest scheme, many car dealers will be prepared to offer discounts on new cars anyway under the current economic climate and it will almost certainly still be cheaper to buy a nearly new car, less than twelve months old, which will not fit the scheme rules. The Government is trying to look as though it is giving something away to people, but of course if someone buys a new car for £10,000, for example, the VAT on the purchase would work out at £1,500, so the Government are still up on the deal by £500. (Did they think that no one would spot that one?)

At the end of the day, the main reason people run around in old cars is because they can’t afford a new one and without additional funding through a subsidised car loan scheme, a large number of people still won’t be able to afford it and will therefore continue to run around in old bangers!