Buyers borrow more for scrappage deals
* Dramatic increase in car loans * Lender reports 37% increase * 'Buyers must shop around for best deals'...
The scrappage scheme has dramatically increased the value of loans being taken out to purchase cars, according to figures released by a major UK bank.
Sainsbury's Finance has reported a 37% increase in the value of personal loans taken out for car purchases in the three months after the introduction of the scrappage scheme.
Bank's lending is up by 17 million a month
The amount of cash borrowed by car buyers since the scrappage scheme's introduction equates to a monthly average of 61 million compared with an average of 44 million a month that the bank was lending prior to the incentive.
The average amount of each car loan is 7515.
'This is a clear sign that the scrappage scheme is succeeding in its mission to stimulate the motor vehicle sector,' said Sainsbury's Finance head of loans, Steven Baillie.
Car buyers are being warned to be cautious about taking on more debt in order to buy a car under the scrappage scheme. Price comparison website uswitch.com points out that the number of different loan deals on offer has decreased over the previous year, while many lenders have increased interest rates.
Our advice is to make sure you shop around when considering a loan. Getting the best deal can significantly reduce your monthly repayments and the total amount you pay.