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Are scrappage schemes a great way to fund your next car or just a load of scrap?

Are scrappage schemes a great way to fund your next car or just a load of scrap?

It looks like that rusting hulk on your driveway could be worth more than you thought. Provided your car was registered before the end of 2009, it could be worth thousands as part of a scrappage scheme, rather than the £73.49 you thought you were going to get on eBay.

If you want to take advantage of the current rush of scrappage schemes, though, you will have to act fast. Almost every car manufacturer is now offering a scrappage deal in the UK, but all expire at the end of 2017, and some sooner.

To find out more you should visit a franchised dealer selling the new car you want to buy, and bear in mind that terms and conditions apply. Typically, a scrappage allowance cannot be used in conjunction with any other offer, so you will have to do some maths to work out which offers the biggest savings – a scrappage deal or one of the dealer’s other offers.

There are a few exceptions – Nissan’s Switch Scheme and Mini’s Emissions Allowance can be used with other offers, but they’re not calling them ‘scrappage schemes’ as such, and the trade-in allowances are a little lower.

Effectively, scrappage schemes offer a guaranteed part-exchange value against your current car. Unlike regular part exchange, though, scrappage schemes guarantee your old, polluting vehicle will be taken off the road and destroyed.

Why is this happening?

The world’s leaders are rightly concerned about air quality and pollution, and it’s pretty clear from pledges already made by the UK and French governments and others that the motor industry and our own driving habits are going to have to change.

We know already that by 2040 (sooner, in other territories) the sale of new petrol and diesel cars will be banned, but the clean-up operation has started already. As well as applying pressure to the motor industry, the government is already investing a great deal of money in air quality improvements.

The main aim is to get older, more polluting cars off the road in exchange for newer, more efficient and less polluting models. The size of the scrappage allowance you get will typically reflect the eco-friendliness of the vehicle you’re buying (and its purchase price).

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So who’s paying?

Good question. The government did pay for the 2009 scrappage scheme, but is not currently paying for this one. Secretary of State for the Environment Michael Gove has not ruled out financial contributions on a local level at some point in the future, but right now it’s the car makers who are carrying the cost.

Or are they?

In fact, some money does come from the government in the form of a low emissions grant made available to car makers and dealerships (not individual car buyers, alas).

The grant covers six categories of vehicle, with a grant of 35% of the purchase price, up to a maximum of £4,500, for the least-polluting Category 1 vehicles, like the Nissan LEAF. 

Can I just buy an old banger and trade it in?

No. The previous government run scrappage scheme required that traded-in vehicles were roadworthy. The terms and conditions of current scrappage schemes don’t suggest this is a requirement, though we are not aware of whether this has been tested yet. 

But they do have specific conditions regarding ownership. Most require that you have been the registered keeper/owner of the vehicle you are trading in for at least 90 days (three months). Some require a minimum period of ownership of six months, and we’ve also seen twelve months quoted.

Given that all the current scrappage schemes expire at the end of 2017, you don’t have time to go out and buy an old wreck with the cynical intention of trading it straight back in.

So does a scrappage scheme make financial sense?

You should proceed with caution and a clear head. It might look as if a vehicle you thought was worth a couple of hundred quid is suddenly worth a couple of thousand, but here are some things to keep in mind.

  • Manufacturers’ quoted scrappage savings will typically be quoted against the new vehicle’s on the road recommended retail price. In reality, new cars are often offered with substantial deals and discounts which mean you may never actually pay this full price.
  • With this in mind, make sure that the scrappage deal saves you more money than any of the other deals being offered by the manufacturer.
  • And remember that even if your current car is not worth as much as the allowance you’re being quoted, it is worth something. Check its private resale value (or even its trade-in value) and use this figure when doing your sums. You may be better off going for a regular new car deal and selling your old car privately.

Sample scrappage schemes

With the Nissan Switch Scheme, you can trade in a car registered in 2009 or earlier and get up to £2000 towards a used Nissan Leaf or selected new Nissans. Nissan says this is in addition to other offers on selected new vehicles.

The Peugeot Scrappage Scheme offers up to £6000 against a new car or £7000 against a new van, and all qualifying vehicles will be taken off the road and scrapped. You can choose vehicles with new PureTech 3-cylinder petrol engines or BlueHDi diesel engines.

Toyota’s Scrappage Scheme covers vehicles more than seven years old and registered to the current owner for at least 6 months, and offers savings of up to £4000 on almost any car in the range. It can’t be used in conjunction with any other offer and the new vehicle must be registered in the same name as the scrapped car.

Ford’s ‘New for Old’ scrappage scheme offers between £2000 and £4950 against a car and £3650-£7000 against a commercial vehicle. Any vehicle registered before 2010 is eligible but it must have been registered to you for at least 90 days

Volkswagen is offering a diesel scrappage scheme saving up to £6000 on a new car and includes any vehicle registered before Dec 31 2009 featuring a Euro 1-4 emissions standard engine. It cannot be used in conjunction with any other offer and the vehicle must have been registered to the current owner for at least 6 months

With Hyundai you can save between £1500 and £5000, including £2000 off the Ioniq Hybrid model, by trading in cars registered before Dec 31 2009 and owned for more than 90 days. Cars of Euro 1-3 standard will be scrapped, Euro 1-4 may be traded in. This deal cannot be used in conjunction with any other offer

The Mini Emissions Allowance is only for EU4 diesels from 2009 or earlier and you’ll need to have owned it for at least 12 months – you then get a £2000 allowance against a variety of new MINI models with CO2 emissions below 130g/km. This applies in addition to other offers.

While the terms of scrappage schemes are broadly similar, these examples demonstrate that there is some variation in the terms and conditions.