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Finance firms cautious about scrappage boost

Finance companies are still waiting to learn some of the details about the Government’s scrappage scheme, to be launched on May 18. 

Paul Harrison, Finance and Leasing Association head of motor finance, said: “We hope the scheme will increase demand for new cars. If it does this will undoubtedly increase demand for finance.

“FLA members will be asked to meet this additional demand at a time when some are struggling to access funding at viable rates. This reinforces the urgent need for Government support to help address funding problems.” 

ACF Car Finance believes the scrappage incentive will do little to help sub-prime customers. Norman Beaumont, sales and marketing director, said: “The majority of sub-prime lenders don’t extend finance to cover older vehicles.”

He said most qualifying owners were unable to get funding to buy a new car, so would be unable to take advantage of the incentive.

Chris Sutton, managing director of Black Horse Motor Finance, said: “We believe many dealerships will use official publicity to launch their own offers to encourage both new and used sales.” 

Car manufacturers are launching finance products linked to the scheme. 

A Mini spokesman said the £2,000 deposit required for a 10.1% APR PCP on the Graphite version could be provided via the allowance. 

See Scrappage: Unravelling the complexities

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