The scrappage scheme is already being claimed a success with 35,000 people taking part, but do you know how much you really pay for a car with the incentive and are you actually saving any money?
Parker's found a number of examples from different manufacturers where the buyer will end up paying more than the original list price by the time their finance agreement comes to an end.
The findings also showed how the finance rate was higher when someone was choosing a new car under the scrappage scheme.
Manufacturers with rates normally around 3.9% and 5.9% APR pushed their rates up as high as 8.9 APR when used with the scrappage incentive.
For a finance plan at Toyota buyers can normally choose between 3.9% and 5.9% - depending on the length of the agreement and deposit - but to take it with the cash-for-scrap incentive you can only opt for the highest agreement of 8.9% APR.
This means that a new 1.8-litre T2 Avensis with an on-the-road price of £16,565 should drop to £14,565 with the £2000 cash-for-scrap offer, but eventually comes to £17,264 meaning you end up paying £699 more than the list price.
Toyota aren't the only manufacturer guilty of putting up their finance agreement with Ford, Renault and Peugeot all doing the same.
As well as eventually paying much more than the on-the-road price, there are also some offers which mean that buyers save very little - nowhere near the £2000 discount promised with the cash-for-scrap.
Taking out finance at Skoda means you have to opt for a rate of 8.9% APR and so will be saving very little on cars like the new Superb. With an on-the-road price of £15,095, a 1.4-litre S model goes down to £13,805 under the scrappage discount. But with the finance plan buyers will end up paying £15,762 - an overall saving of just £143.
Buying a new SEAT under the scrappage discount with finance also means minimal saving. With offers of 0% APR on selected models outside of scrappage, this is raised to 8.5% APR with the scrapping discount.
A 1.2-litre Ibiza SC S with air-con is normally £9505 on the road. This then drops to £7505 with the £2000 bonus but buyers end up paying £8813 - a saving of just £182.
The Skoda and SEAT schemes differ from many other finance plans in the scrappage discount. Under the Toyota and Ford agreements buyers pay no deposit, but for the SEAT and Skoda deals they have to pay a deposit of £1,027 and £3,878 respectively
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Manufacturer
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Scrappage finance plans
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Renault
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10.4% APR
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Skoda
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9.9% APR
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Peugeot
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9.9% APR
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Alfa Romeo
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9.5% APR
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Toyota
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8.9% APR
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SEAT
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8.5% APR
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Ford
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7.9% APR
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