Apr 242008

older carChoosing an older vehicle could be a home-saver for the UK’s cash strapped mortgage holders. Buying a new car could be the difference between “home ownership” or “repossession” claims a new report.

A new car is the worst investment most people will ever make. A £15,000 car will lose around half its value in three years. If you borrow the money to buy the car at 7.7% interest it will cost you an extra £1,847. 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.

The £9,347 loss on a new vehicle would be enough to pay the interest on a £100,000 mortgage for nearly two years. Cash strapped home owners could use this cash 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 motorists indulging in expensive cars on finance to impress friends and neighbours. With some mortgage deals set to rise by as much as 40% – many over financed motorists will no longer have a neighbour to impress.

Mail Order specialists, Car Parts Direct claim buying a three year old vehicle or keeping your existing car is financially the most cost efficient way to run a reliable vehicle.

Mark Cornwall of Car Parts Direct said, “Cars are reliable for at least 10 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.”

Car Parts Direct claims a motorist thinking of buying a £15,000 new car could save themselves more than £250 every month by buying at three years or by keeping their existing vehicle – for most home owners, that’s enough to stay clear of the mortgage debt trap. Motorists can find advice on how to save on vehicle servicing and repairs by visiting www.carparts-direct.co.uk