Car loans rise following launch of ‘cash for bangers’ scheme

Research from Sainsbury’s Finance has found that since the launch of the Government’s scrappage scheme in May, an estimated £61.2 million of personal loans per month have been taken out to purchase cars, compared with a monthly average of £44.7 million in 2009, prior to the scheme.

The scheme, which pays consumers £2,000 to get rid of their old cars and replace it with a more environmentally friendly car, proved to be so successful that the Government recently announced an extension of the scheme to cover an additional 100,000 cars and vans.

According to Sainsbury’s Finance, the scheme is responsible for a 37% increase in the value of personal loans taken out to purchase cars in the 3 months after the launch date of 18 May.

Commenting on the figures, Steven Baillie, head of Sainsbury’s loans, 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.”

The scrappage scheme was introduced to boost the ailing car industry and has since contributed to a sharp rise in car sales, according to the Society of Motor Manufacturers and Traders.

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