Pensioners Benefiting From The Vehicle Scrappage Scheme Thanks To Equity Release
New research has shown that the over 60s are amongst those benefiting from the Governments new vehicle scrappage scheme. The research from Key Retirement Solutions (KRS) revealed that the over 60s are funding their new car purchases by releasing equity from their homes.
6% increase in new equity release plans used to buy a new car
KRS’s analysis showed that that 10% of pensioners who signed up for an equity release plan between January and May 2009 used the equity released from their home to buy a new car.
The Government scrappage scheme officially launched in May this year; In the month of May the percentage of over 60s signing up for an equity release scheme to buy a new car jumped 6% to 16%.
Dean Mirfin, KRS’s Group Director, said: “Purchasing a new car under the vehicle scrappage scheme is proving beneficial not only to younger, but also to older, households. For those who do not have the capital or income available to support a new car purchase, many see this opportunity as too good to miss, and so are looking to equity release as the solution. The further increased interest that we are seeing from those aged 60 and over since the scheme launched should no doubt result in more uptake from this age group. The over 60’s will clearly be playing an important part in helping fuel the motor industry during 2009 and beyond.”
Multiple reasons for choosing an Equity Release Scheme
For the over 60s the equity released from their home can be used for anything they require, but many doing so use the money for a multiple reasons. Research shows the many uses include: to purchase a new car; for home improvements; care funding; and repaying debt.
For many pensioners the Government’s vehicle scrappage scheme is possibly too good to miss, as so far 8.1% of all vehicles purchased under the scheme have been made by the 60 and over age group (Source: Retail Motor Industry Federation/Automotive Management Survey 4 June 2009).
Number of equity release plans used to buy a new car forecasted to increase
In their original press release, KRS forecasted that they expect the number of pensioners using equity release to purchase a new car to increase even further. When KRS questioned new customers their reasons for signing up for equity release scheme many stated their overriding reason was that the new scrappage scheme had motivated them to act and buy a car now rather than later.
KRS state that the average amount being release to purchase a new vehicle is £8,710 and go on to predict that approximately “25,000 equity release plans will be taken out during 2009 which means that, based on the current trend, almost £22m will be released to purchase a new car.”
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