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Have we seen the end of 0% car finance?

As the UK car scrappage scheme comes into play in the UK there are concerns that more and more pressure is being placed upon car retailers who are already in a precarious position. Despite the fact that car retailers in the UK have been forced to slash prices across the board over the last 18 months the government is asking them to find additional discounts of £1000 plus in order to attract new business.

Many car retailers are now suggesting that we have seen the end, or we will see the end, of 0% car finance which in effect is itself a discount to those looking to pay for their new vehicle over the longer term. Many car retailers have made significant money from commission associated with 0% finance deals but with the government demanding discounts for "scrapped cars" it looks as though 0% finance deals will disappear across the board.

Now that the fine print of the U.K.'s scrappage project is starting to filter through into the open market, there are serious concerns that it has not been thought out thoroughly. Consumers will be demanding their discount and many car retailers will be unable to give these without reducing or eliminating existing promotions. At the end of the day, there may be a minimal increase in trade for the retail industry although consumers could see discounts offered with one hand and promotions taken away with another, leaving a neutral position.

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