AS the credit crunch bites, and loans become harder to obtain, choosing an older vehicle could be a home-saver for the UK's cash strapped mortgage holders.

In fact, opting for a new car could be a straight choice between home ownership or repossession, claims a new report from a leading British car parts mail order firm.

"A new car is the worst investment most people will ever make," says Mark Cornwall, spokesman for Car Parts Direct.

"A £15,000 car will lose about half its value in three years. If you borrow the money to buy the car at 7.7 per cent interest, it will cost you an extra £1,847," he said.

"That's a total of £9,347 - all out of taxed income. Personal Contract Purchase (PCP) can cost even more, and there are limits on mileage and expensive penalties should you want to change the vehicle early."

Mr Cornwall said the £9,347 loss on a new vehicle would be enough to pay the interest on a £100,000 mortgage for almost two years.

"Cash-strapped home owners could use this money to avoid losing their home when their low-cost, fixed-rate mortgage deal ends."

The car has become both a status symbol and a must-have social accessory, with an increasing number of UK motorists indulging in expensive cars on finance to impress friends and neighbours.

"With some mortgage deals set to rise by as much as 40 per cent, many over-financed motorists will no longer have a neighbour to impress," said Mr Cornwall.

Car Parts Direct claims that buying a three-year-old vehicle, or keeping your existing car, is financially the most cost-efficient way to run a reliable vehicle.

Mr Cornwall added: "Cars are reliable for at least ten years, providing they are serviced.

"Items such as brakes cost very little.

'Even the more expensive parts that could fail, such as shock absorbers, drive shafts, or a steering rack rarely cost more than a couple of hundred pounds - this is peanuts compared to financing a new vehicle."

The company said that a motorist thinking of buying a £15,000 new car could save themselves more than £250 every month by buying one at three years old, or by keeping their existing vehicle.