One of the best ways to get the best prices on new cars is to take advantage of monthly sales incentives such as rebates and bonus discounts sponsored by car manufacturers through dealers (see Best Car Deals for details).

However, the catch is that those incentives are only good on selected vehicle models and styles, and only for a limited time.  If the particular brand, model, and style that you want is not one of those with incentives offers this month, you are back to square one — negotiating for deals the old fashion way.

A new company has come along that changes all that, and may change how we buy cars in the future.

TrueCar answers the question, “What should I pay for my car?” Even if you are a shrewd negotiator, you have to know your target price. You also would benefit by knowing what other people are paying for the same car, same model, same style that you want. With that knowledge, you will know the price you should be aiming at.

As you may already know, car manufacturers offer sales incentives nearly every month. Some are better than others in any particular month.

The most common type of incentive is a rebate, which is given to customers at the time they buy the particular vehicle model and style on which the rebate is offered. It is applied as a down payment and is especially attractive to customers who might be short on their own down payment cash.

Rebates, when at least $2000, are generally better than 0% APR loan deals and save you more money. As you may know, if a car company is offering both a rebate and 0% APR (or other low-interest loan rate), you must choose one or the other, but not both.

American car companies (General Motors, Chrysler, and Ford) have traditionally offered the best and highest rebates, although there have exceptions. Rebates are usually largest at the end of the model year, during the months of September, October, November, and December. Car companies and dealers are trying to sell off last year’s models to make room for incoming new models.

Although we’ve discussed this topic previously (see Lease vs Buy), there is one aspect that we haven’t discussed and continue to hear questions about.

The question is essentially this: “If a car dealer is offering a special promotional lease deal, a purchase rebate, and a low interest loan on the car I want, which one is the best deal?”

The short answer to this question is that the lease deal will nearly always be better — and it’s not simply because monthly payments are less. If the lease deal is one that is being offered by the car manufacturer, the company has usually applied a price discount, a low money factor (finance rate), and a high lease-end residual value. The combination of all these things makes for an attractive low monthly payment. Customers are not able to negotiate these kinds of deals for themselves  because a dealer only controls one of those three things — price.

Even many experienced car buyers don’t know about the “secret” factory-to-dealer rebates given to dealers by car manufacturers.

Car companies often select certain models and styles for these rebates, and the selection can change from month to month.

Dealers can use factory-to-dealer cash (sometimes called “marketing support”) in almost any way they choose but most pass it along to customers in the form of price discounts. Some dealers might advertise the low prices (not the rebates themselves) or simply offer a discount to customers during the buying process. He may choose to give all or just some of the total rebate.

Most customers are not aware of which vehicles have factory-to-dealer rebates, or the amounts. Therefore, it is difficult to factor in those discounts in the negotiating process. However, our sister web site, Best Car Deals, provides such information.  Some of these rebates are very large and represent a significant discount off of sticker price. This is particularly true for last year’s leftover models that dealers must sell in order to make room for this year’s incoming models.

If a dealer gets a factory rebate on a particular model and gives it to customers as a price discount, he still makes his usual profit on that car, even though customers may be getting a great deal. Smart customers will expect the dealer to contribute some of his usual profit as an additional discount — which makes an even better deal. In many cases, customers can buy a car for less than dealer invoice price, which is only possible if the car manufacturer is helping with the deal.

In summary, factory-to-dealer rebates can be a large factor in making new cars — especially first cars — more affordable. Look for vehicles with the largest factory-to-dealer rebates.

You can get free price quotes for any vehicle at Edmunds.com. The prices you get will contain any current price discounts and manufacturer incentives that are available.

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If you don’t like having to spend a lot of time and research effort when looking for a new car, wouldn’t it be nice to find out what other people were buying, assuming that most of those other people had spent the time and effort, and had made good informed decisions.

If you decided to buy one of the cars that other people are buying the most, you could reasonably assume that those purchases are being made on the basis of those cars having most of the good characteristics that people want in a new car — such as good reliability, good safety ratings, good performance, good styling, good fuel economy, and good driving comfort.

Following is a list of the top ten best-selling new vehicles in the U.S. for the last several months:

Car manufacturers use incentives to make their new cars more affordable during limited-time promotions.

The most common incentive is a direct to customer rebate, although there can also be other incentives such as low-interest loans, 0% APR loans, special car lease deals, and “hidden” factory-to-dealer cash.

Incentive programs vary from month to month depending on which models and styles manufacturers feel need sales “help”. Slow selling models or last-year’s leftover vehicles typically get the best rebates and incentives. However, it not ususual for a brand new model to get good rebates or other incentives.

A rebate is a credit that you receive when you buy a new car during the promotional period. It shows up on your paperwork the same as a down payment, although the money comes from the manufacturer’s pocket, not the dealer’s, and is like a gift to you that reduces the amount you pay for your car.

However, a rebate is not a price discount. It doesn’t change the selling price of the car (although it changes what you pay).  Rebates and discounts are NOT the same, although both reduce the amount you pay for a car. Let’s explain.

Should I keep my old car and fix it up, or buy a new car?

Expressed another way, the question is this: Is it smarter, more practical, and more economical for me to keep and fix my old car than to buy another car, new or used?

This is always a tough one to answer. Generally, it’s going to be better to fix up an old car than buy a new car every five years or so.

However, the real answer depends on your particular circumstances. Here are some tips that will help you make a decision.

As this is being written, this year, 2011, has become the best time to buy a new car in years. And 2012 looks to be even better.

In normal years, we would tell you that the best time to buy a car is when sales are slow at the end of the month, end or the year, or during vacation season. We would tell you that you might still have to negotiate your prices because dealers aren’t just going to give you a good deal because they like you.

BUT……..things are much different now. Sales have been slow for over a year and are still slow right now. As a result, we are now seeing some of the biggest and best car incentives on new cars that we’ve seen in years. Nearly every car manufacturer is now offering a combination of large factory-to-customer rebates, low-interest loan deals, 0% APR loans (even on long 72 month loans), special lease deals, free maintenance, and “secret” factory-to-dealer rebates that dealers usually give to customers.

Why has 2011 become such a good time to buy a car?

Better to Buy Pre-Owned Car, or New Car?

First time car buyers have a choice of buying a brand new car, or buying a used car. Which is better?

There are advantages and disadvantages to either choice. Most people would rather have a brand new car with its new-car smell and latest style, but there are reasons that a new car might not be the best choice. Let’s take a look at the pros and cons of buying new and buying used.

Advantages of Buying New

• You get a brand new car with new-car feel and smell
• You get the latest style and technology
• You get the latest safety equipment
• You get a full manufacturer’s warranty
• You get Lemon Law protection
• You get lowest loan interest rates, if you qualify
• You get the option to lease
• You may get special manufacturer-sponsored pricing and financing

How much down payment do I need for my car loan?

Until relatively recent times, it was standard for car dealers and finance companies to require at least 20% down payment on the purchase of a car. It was for a good reason.

Because cars depreciate in value from the moment they are driven off a dealer’s lot, a down payment helps offset that rapid decrease in value, which may keep the loan from becoming “upside down.”  It also protects the loan company or bank because, if they have to repossess the vehicle, they have a smaller risk of losing money.

Things are different now
Auto manufacturers and dealers are now very competitive and business must be fought for. They are willing to take risks that were unheard of just a few years ago. In many cases, down payment requirements have been reduced or eliminated altogether, primarily for customers with good credit.

If you still owe more on your loan than your car is worth, you are upside down.

You may still be able to buy another car if you are upside down on your previous loan.

There are two ways to go about it.

One way to buy with an upside down loan
You could sell your old car but you will have to add extra cash to fully pay off your old loan. You’ll need to pay off your loan so that you can give a clear title to your buyer. However, coming up with extra cash might be a problem, especially if you are upside down by a large amount. For many people, this solution is not possible.

Let’s look at some other ways.

What to Pay for New Cars — What’s a Good Price?

Here’s how to determine a fair price for brand new cars (see below for used-car pricing).

All new cars have a window sticker that displays the manufacturer’s suggested retail price (MSRP). It may also include destination charges, dealer-installed option prices, and other miscellaneous charges. The total of these charges is the price you would pay for that vehicle, less sales tax, without any discounts or rebates.

All these charges but destination charge can be negotiated. Manaufacturers charge dealers this fee for vehicle delivery, and dealers simply pass it along to customers without markup. It cannot be eliminated from the cost of a car.

Price can be negotiated for most vehicles. Unless the vehicle is a hot seller and in short demand, it’s usually possible to get dealers to discount the MSRP. But, how much? What’s the best price I can expect?

Here’s your strategy for negotiating price.

Many people choose to trade in a car when buying or leasing another car. But how does the trade-in process work? Do I lose money by trading?

Here is how a car trade works. Car dealers buy your old car from you and give you credit toward the price of a new car. The trade-in credit is like a down payment and reduces the price of your new car, making your monthly payments smaller. The dealer then puts your old car on his used-car lot to sell, or he sends it to a dealer car auction where another dealer will buy it to put on his own used-car lot.

Dealers make a lot of profit on selling used cars they’ve taken as trade-in. They pay the trading customer a low wholesale price, and sell the car for a higher retail price. That’s how they make their money and stay in business.

New Car, First Car

If you’ve decided that your first car will be a brand new car, there are things you need to know about the buying and financing process that makes it different from buying a used car.

New cars – only from dealers
All new cars must  be purchased from state-licensed and manufacturer-authorized new-car dealers. It’s the law. It’s the only way you can buy a new car.

If a car has never been titled or registered, it’s considered to be a new car. Even if you initiate your purchase through an Internet car buying service, or through a buying service at warehouse stores such as Sam’s Club, the car actually comes from a local new-car dealer.

Your First Car – Making Your Decision

Most of us get our first car as teenagers. It’s the car we’ll always remember.

Let’s take a look at some of the important questions you’ll want to consider when deciding about what you’ll buy as your first car, how you’ll pay for it, and how to go about the purchase.

How much can you spend?

If cost is not important and you can choose practically any car you want, we’ll get to you later. However, most teens have restrictions on how much they can spend. It might be that parents are buying and have set a price limit, or that you have your own budget and limited income.