Market analysis from Sainsbury’s Finance has found that consumers have borrowed significantly more in car loans since the Government introduced its car scrappage scheme.
Based on analysis of its own loans business and market share, Sainsbury’s estimates that consumers have borrowed £61.2million worth of loans for the purpose of buying a car since the scheme was introduced, suggesting that the Government has been successful in its mission to stimulate the auto industry.
Personal loans for car purchase rose 37 per cent in the three month period from May 18, when the scheme was launched, with a monthly average of £61.2million worth of car loans being taken out, up from a monthly average of £44.7million before the scheme was introduced.
Sainsbury’s Finance believes that the scrappage scheme is directly responsible for this increase in the value of car loans, with an average loan value of £7,515 for purchasing a new car.
The Government’s car scrappage scheme, announced in the Chancellor Alistair Darling’s Budget for 2009/2010 in April, allows owners of cars and small vans which are at least 10 years old to trade them in for £2,000 towards the price of a brand new car or van.
Steven Baillie, head of Sainsbury’s loans said: “Since the Government’s scheme has been introduced we have seen a sharp spike in the number of loans people are taking out in order to buy a car, which is hopefully a good sign that the motor vehicle market is coming back to life.”
Mr Baillie recommends that people looking for a car loan should shop around, as finding the best deal could make a big difference to their repayments.
Sainsbury’s personal loans are currently offering a typical APR of 8.0 per cent to Sainsbury’s shoppers applying online with a nectar card, looking to borrow between £7,500 and £15,000. Borrowers can get an instant decision, choose to make no repayments for the first three months, and receive their cheque within 24 hours of acceptance.
Apply online for a Sainsbury’s loan here »
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