Wallet watch: guide to getting the best scrappage deal

Today we're looking at:

Scrap. What else? The latest news from the rusty yard that is the scrap scheme is that we've gone past halfway, with the Government reporting that precisely 175,947 cars have been registered under the scheme as of 16th August 2009.

So you might think that the scheme is already a success. Well, in some respects that's certainly the case, although we've been getting some inside information here at Yahoo! Cars that suggests the reality of scrap isn't quite the cosy bed of bangers the numbers say it is.

Your options are:

To scrap or not to scrap? That is the question. With makers boasting some seemingly amazing deals with the scrap discount, it seems like a no brainer for those that qualify to get down to a showroom with their old jalopy and exchange it for a nice healthy discount on a new car. The temporary nature of the £300m scrap pot makes grabbing a share of it seem like a once in a lifetime deal. But as we've found out, that's often not the case at all.

For a start, an investigation by consumer website Parkers found that in some cases makers are reserving their best finance rates for non-scrap customers, forcing scrap buyers to take on higher rates, ultimately negating the discount. Toyota, Ford, Renault and Peugeot were all found guilty, with the entire £2,000 saving wiped out by interest payments on occasion.

Of course, cash buyers needn't worry about that - though there are other perils, including makers bumping up the list prices of their new cars so that even cash buyers don't save as much. Ford, for example, has put its prices up by around 12.5 percent across the range, which means that on average a Focus hatch is between £1,500-£2,000 more now that it was at the start of 2009.

Here's how to save:

Of course, there are plenty of makers offering some very tempting deals under the scrap scheme - particularly for people with ten-year-old-plus cars worth pennies on the used market - but buyers should be careful to weigh up their options and find out what they're actually paying before signing up. A £2,000 saving can look attractive, but a big discount can usually be negotiated on a new car in any event - often up to £2,000 - and a more attractive finance deal can be used to pay, which means that by the time you've sold your old car on the open market you're potentially better off without scrap.

Plus, avoid main dealerships and there are some incredible deals to be had. For example, Motor Provider is currently offering a brand new BMW 116i for just £12,490 - that's over £4,000 off list price. Plenty of brokers offer similarly impressive savings. There's the nearly-new issue too. The scrap scheme doesn't extend to used cars, but there are some whopping discounts to be had by buying a pre-registered or one-year-old car.

However, bear in mind that scrap is often the only way to get a discount on certain cars. For example, a Fiat insider told Yahoo! Cars that the maker wasn't best pleased about the scrap scheme because it was forced to discount the popular 500, which it had never needed to do before. So, if you're thinking about one of those, or another model that's traditionally difficult to barter a discount on (like the Alfa MiTo or MINI), scrap is a good way to go.

On the other hand, cars that are already very cheap, like the Hyundai i10, become amazingly so under the scheme - which perhaps explains why Hyundai UK is selling "four times as many" cars, according to UK Managing Director Tony Whitehorn, than it was previously. And when you can get a brand new supermini with a five-year warranty for less than £5,000, it's easy to see why it's tempting.

Ultimately it boils down to doing your homework once you've decided what you want - don't be easily taken in by the headline £2,000 discount without first seeing what's really best for you.

Mark Nichol