Basingstoke, United Kingdom (PressExposure) June 29, 2009 -- Recession-hit car buyers are digging into their savings to pay for new vehicles, according to AA Savings.
An AA/Populus poll of over 13,000 car owners suggests that nearly half (47%) of those intending to buy a car over coming months will partly or wholly do so by raiding their savings.
Mark Huggins, director of AA Savings Accounts says: âMany families are reluctant to take on new debt during a time of recession and would rather cut down on luxuries in order to stretch family finances and try to put some money away.
âA car would have been a long way down the list of family priorities, until the launch of the Governmentâs car scrappage scheme which provides Â£2,000 towards a new car in exchange for one over 10 years old.â
Huggins points out that the car scrappage scheme has opened up a new market for people who wouldnât ordinarily buy a brand new car and has resulted in 15,000 orders per week since it was launched in May â 75,000 orders over the first five weeks.
âCriticism from some quarters that buyers suffer fast depreciation of a new car isnât relevant because most people using the scheme are likely to keep their car for several years. And compared with their old model, it will bring long-term economies â such as less frequent service intervals, fewer unexpected repair bills and better fuel economy as well as safety and green benefits.
âFamilies who can avoid using finance to buy into the scheme become the real economic winners.â Cheaper car insurance quotes for the new cars could be obtained from The AA.
A separate AA/Populus poll showed that up to 300,000 people with decade-old cars say they will use the car scrappage scheme. âIt would be wise to act quickly though â there is a limit to funding of the scheme and there is no guarantee that the Government will extend it in the future.â
Huggins also points to evidence that many families are starting to save again. âThere have been a number of surveys suggesting that Brits are feeling increasingly confident about putting money away. For savers, buying a car is often a key goal and the motor industry should be encouraged by this more optimistic mood.
âWith interest rates improving, now is certainly a good time to get back into the habit of saving.â
AA Savings recently introduced three fixed-rate savings accounts, offering interest rates of up to 4.50 per cent gross/AER.