To scrap or not to scrap your car?
January 2010
If you have been thinking about changing your car for a while now, 2010 might well be the best time to make your move as manufacturers, dealers and the Government are all offering incentives that reduce the price of new cars.
Manufacturers have been reducing prices for some time due to the economic climate and dealers have also been offering promotions on new cars such as cashback, 0% finance and free service deals.
The December 2009 Budget announced a scheme under which you could save €1,500 on a new low-emissions car when scrapping an existing car aged 10 years or older. According to the Society of the Irish Motor Industry (SIMI), some 600,000 cars could be eligible.
Many dealers are also supplementing the Government's scrappage scheme with their own scrappage offers, so if you shop around and do your research, you could drive off with a good deal.
Here are six main reasons why you might benefit from scrapping your car in 2010...
1. It's new!
Firstly, you'll be driving a new car, with all the benefits that that brings.
Benefits will generally include enhanced safety systems, higher specifications, better performance, lower emissions, a warranty, breakdown cover, a possible reduction in insurance premium (depending on engine size and value) and the knowledge and peace of mind that nothing should go wrong for the first few years of driving at least.
2. Choice
Even though the scheme applies specifically to new low emission cars, in practice it extends to a very large selection of cars of all shapes and sizes from most of the major manufacturers and includes a number of family and premium cars.
Read a list of qualifying models on SIMI's website.
3. Lower tax
Annual Road Tax for qualifying new cars is €104 for Band A (0g to 120g/km) vehicles and €156 for vehicles in Band B (121g to 140g/km). Generally, by buying a newer, more efficient car you not only pay less annual road tax, but also benefit from greater fuel efficiency. On top of this, you can reclaim any road tax remaining on your scrapped vehicle in excess of three months.
Read details of how to reclaim on the Department of the Environment, Heritage and Local Government website.
4. NCT savings
Under current legislation, a new car will not be subject to the NCT test for four years from the date of first registration.
And if you look after the car and service it properly in that time, you're unlikely to have to pay out any more than the cost of the test.
According to the Department of Transport, nowadays two thirds of cars aged 10 years and older presented for a test do not pass first time.
Depending on the cause of the NCT failure, in some cases, getting things put right before the retest could be a costly exercise.
Read our guide to Car Servicing and Car Repairs
5. Save on servicing/repairs
Older cars are more likely to require more care and attention than newer models.
You may find the need to replace parts or have things repaired arising more often, and servicing might not be just an annual event any more. Some repairs and parts can be quite costly and disruptive.
6. Safety
According to the Department of Transport, almost half (47%) of collisions that occurred in 2007 involved vehicles at least nine years old.
With enhanced safety systems and less likelihood of something going wrong on new cars, there may be safety benefits associated with trading up for a newer model.
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Here are three key questions that consumers should ask about whether there are advantages in scrapping their existing car.
Do I need to change?
The biggest consideration is whether or not your existing car needs to be replaced at all.
If it has been running well, has been serviced regularly, does low mileage and isn't needed for particularly onerous tasks such as carrying heavy objects regularly, then there may not be any need to change your car at all.
A chat with the mechanic carrying out the next service on it should give you an indication of its health. Bear in mind that the Government's scrappage scheme is set to run until the end of 2010, so you have until then to make your mind up.
While the current scrappage offer is time defined, current market conditions mean that car dealers are more disposed than ever to offer competitive deals, so don't be rushed if you feel the time is not yet right for you.
New or newer?
If, however, your car is becoming troublesome, needing more regular attention or repairs, or is likely to have to work harder for some reason in future, such as travelling further to work or coping with an increase in family size, you might be thinking of updating it to a brand new car.
But there is also the option to update to a newer, but not totally new, model.
Dealers are also offering good deals on used cars at present, with some offering equivalent, or even higher, "manufacturer's scrappage" deals on their used stock. In practice, this means that while your car may not be eligible for the Government scheme, there may still be excellent manufacturer offers available.
If you decide to update to a newer used car, be sure to approach any deal with the right information to hand.
Our "Guide to Buying a Car" booklet (see links below) has information and tips on how to select the right car for you, how to check the condition and background of the car, buying privately, how to finance the purchase and what your legal rights are when you buy a car.
Making payment
Whether you decide to invest in a new car under the scheme or to update to a newer used car, your next big decision is about how you're going to pay for it.
It is likely that you will no longer have loan repayments on your old car, so buying new or newer could make a big impact on your finances. Besides the purchase price, you need to factor in insurance, road tax and other running costs.
To keep that financial impact to a minimum, decide your budget beforehand and then push for the best deal possible with the dealer.
Don't be afraid to haggle. You'll generally find there's some leeway there in order to secure the deal. If you're not satisfied, don't be afraid to walk away.
Shop around for the best insurance quote with numerous providers. Do some research on the running costs of the car and how much it's likely to cost you - Sustainable Energy Ireland's Fuel Efficiency Calculator (see links below) also gives information on a car's fuel usage and road tax band.
If you are entering into a financial agreement to pay for the car, before you sign anything make sure you know what type of agreement you're entering into and your rights and responsibilities under that agreement.
Learn more
Find out about the conditions behind the scheme
Read our consumer guide on buying a car or download a printable version (PDF, 1 MB)
Printed copies of the guide are also available through our Consumer Helpline on 1890 432 432.
Check out your finance options and use a loan calculator to work out repayment costs on the Financial Regulator's website www.itsyourmoney.ie
Use SEI's Fuel Efficiency Calculator