Scrappage scheme `has encouraged debt`
October 30, 2009 by Admin · Leave a Comment
According to a report by Sainsbury`s Finance, there was a `sharp increase` in the amount of debt taken on in the form of personal loans to purchase cars following the introduction of the Government`s car scrappage scheme on May 18th, The Times reports.
Sainsbury`s estimated that the scheme is `directly responsible` for a 37% rise in the value of personal loans taken out to buy cars in the three-month period immediately after the scheme was introduced.
In the same period, the average amount of debt taken on by an individual (for a car purchase) was 7,515, and it is thought that the total amount of debt taken on every month to buy cars totals around 61.2m.
A spokesperson for comparison website Uswitch.com said: “Consumers should be cautious about taking out a loan unnecessarily and getting themselves into more debt. Also, the benefit of scrappage is undermined by huge falls in the value of a new car as soon as it is driven off the forecourt.”
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