Belfast Telegraph

Wednesday 27 August 2014

Depreciation wipes out scrap cash ‘in 88 days’

The £2,000 incentive under the Government’s “cash for bangers” car-scrappage scheme will be wiped out in just 88 days due to depreciation, it has been revealed.

From Monday, owners of cars 10 years old or more will get £2,000 if they trade in their old model and buy a new one.

But according to price comparison company uSwitch.com, vehicle depreciation is set to be the “thorn in the side” of the scrappage scheme.

The company said:

  • On average, the initial £2,000 incentive is wiped out in depreciation in just 88 days of owning the new car
  • In total, new vehicles purchased under the Government’s car scrappage scheme are set to lose £12.5 billion in depreciation after just one year
  • Purchasing one of the top ten most popular new cars costs £16,232 on average and this value plummets by 49% in the first year alone
  • The UK’s best-selling car — the Ford Focus Style — loses £8,635 or 51% of its value in the first year
  • Drivers should read the small print on car insurance policies as the write-off value varies substantially between policies.

Mark Monteiro, spokesman for uSwitch.com, said: “The Government’s car-scrappage scheme has been introduced to give the ailing motor industry a much needed shot in the arm by enticing motorists to participate with a £2,000 incentive.

“However, while this is a positive bonus for consumers, it seems even this payout can’t hold its weight against the magnitude of vehicle depreciation, which dents the value a car from the moment you drive off the forecourt.”

He went on: “When choosing a new vehicle, motorists should ensure they research the rate of depreciation of their desired new car, as research highlights how some of the top 10 most-popular vehicles hold their value far better than others.

“Any motorists tempted to take advantage of the scheme should research the cost of insuring their desired new vehicle as a matter of priority, as the cost could be significantly higher than they are currently paying for their old banger.

“All drivers who are planning to switch their old cars for a newer model need to be prepared for a hike to their premiums of up to 30%.”

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? customercare@belfasttelegraph.co.uk

Nightlife Galleries

More

Latest Food and Drink News

Latest Motoring News