Consumers are holding off on making purchases, and almost every brand has seen a devastating drop in sales. The impact has been catastrophic, resonating through the full industry from factory to showroom, and hitting thousands of businesses in between. Combined, this historic downturn is creating unusual circumstances for the estimated 10 million consumers projected to be in the market for a new car this year. There are deep discounts available on cars today, but to make sure you get a great deal, rather than just accomplish the noble goal of stimulating the economy, do your research and proceed cautiously.

Car Buying In Winter 2009

There hasn’t been a more unusual time to buy a new car in this century. Hundreds of car dealers have closed their doors, and, sadly, many more will likely follow. Those that remain open are literally overflowing with inventory. Trade-in values are lower than when you bought your last car. Lease deals are harder to find and generally less appealing than in the past. And traditional financing is hard to get.

This is a rare moment in time, and one that may pass before summer. Right now, automakers have pulled the emergency brake on production, working to desperately balance out inventory with demand. The effect will be to bring down the dealer inventories to sustainable levels, at which point the incentives and willingness to negotiate will be reduced. (See the Best New Car Deals on Consumer Reports Recommended cars.)

Rest assured, this won’t be the last time great deals are offered, but it is certainly a sweet spot for anyone currently considering buying a new or used car. Most shoppers would be wise to consider a fuel-efficient car now while discounts are available and gas prices are relatively low; once inventories level out and gas prices rise, finding incentives on thrifty four-cylinder and hybrid models will be more difficult. Conversely, resist the temptation to buy an SUV, truck, or other thirsty model on the belief that gas will remain cheap. There is no basis for such an assumption, and cost of ownership should play an important role in the decision-making process, as many households have financial concerns. Incredible deals can be found, but to make sure they remain smart choices for over your ownership period, go into the buying process with your eyes open.

Buying Tips for Getting the Best Deal Today

Faced with large customer rebates, there is a temptation to take them on face value. As revealed in the Consumer Reports Bottom Line Price, there are hidden dollars on the dealer side that can be used in negotiation. For instance, most dealers receive a 2-3 percent holdback fee after the vehicle sale, giving them some additional negotiation space. And just as there are customer rebates, there are many direct-to-dealer rebates. These hidden dollars can sometimes be even greater than the customer cash. Examples of cars with currently available dealer incentives are below, with a full list available with our Best New Car Deals.

Make sure you’re getting a good car — one that scores highly in Consumer Reports testing, reliability, and owner satisfaction data; has average or better owner costs; and a solid safety record. CR has highlights models in every vehicle category that meet our stringent criteria to be recommended. (Use our New Car Selector, browse models A-Z, available to online subscribers, or focus on those cited in our Best New Car Deals.)

Getting a great deal today is exciting, but living with a good, reliable and safe car for years to come is more important. In fact, plan to hold on to the car for at least five years — get your money’s worth. After all, due to steep, initial depreciation, a car is much less costly to own in its fifth year than its first. (Learn more about owner costs.)

On financing, it is important to be honest with what you can afford. Difficulty in securing financing comes from lending institutions feeling you may struggle with the payments or be a default risk, based on past performance. Putting a larger down payment can help, as can having a co-signer. Just as important is fiscal discretion. Don’t buy more car than you routinely need, both in terms of scale and features. For example, focus on the daily use rather than the once-a-year vacation. It may be more cost effective to simply rent a vehicle for those rare needs. And don’t disclose to the dealer that you can afford “X” dollars a month; they will find a way to get you in a car for exactly that, even if it means stretching out the loan period.

Be sure to check current average interest rates and secure similar financing before committing to a vehicle purchase. While a dealer can provide finance options, they will profit from the transaction and thereby may not have the best rates. And always check the rates at your local bank or credit union.

Bottom Line

In this economy, focus on needs more than wants. That simple principle will help guide prudent decisions through the entire process. There are great deals available from most automotive brands, though remember that not all cars are good.

See the latest deals on Consumer Reports Recommended cars, and read our complete new and used car buying advice sections.