Monday 26th of October 2009
The amount of personal loans taken out to purchase cars has risen by almost 50 per cent since the government’s scrappage scheme was introduced - loans that an individual voluntary arrangement (IVA) could help to repay.
Each month, £61.7 million in personal loans is secured by consumers looking to buy a new vehicle, compared with £44.7 million pre-scrappage scheme, according to Sainsbury’s Finance.
The scrappage scheme, introduced in April, allows motorists to trade in an old car and receive £2,000 towards buying a new one - which, on average, costs £7,515.
A personal loan to fund the difference between the two figures could therefore be tempting to many, determined to take advantage of the government’s offer while it lasts.
And those who have incurred debt in pursuit of their dream car may wish to turn to an IVA to help pay back what they owe.
IVAs deal with unsecured debt of more than £15,000, seeking to freeze interest rates and renegotiate repayment schedules so that they are in line with what a debtor can afford.
Such a deal could be attractive to people who have overspent in order to secure the latest Volvo, Ford or Vauxhall.
By Rachel Powell
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Brits 'should prepare for debt troubles now'
