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Buying & Leasing a Car

How to Drive Home a Bargain

Armed with good credit, you can score the best deal on a new car.

Deals are spectacular, but the terms have changed. For one thing, leasing is less attractive as carmakers struggle to predict what their vehicles will be worth in three years. To play it safe, they're charging higher monthly payments.

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For straight-up buyers, credit score and down payment are more important than they were a year ago. Cash rebates and low-rate-financing offers abound, but the lowest rates from the carmakers' own finance companies are for 36-month loans, and you'll need a credit score higher than 700 to qualify. If you don't score that high, you may be able to trim the interest rate by coming up with a bigger down payment. Usually you have to choose either the low rate or the rebate. In general, if you plan to trade the car within three years, take the rebate and bring your own financing. But make sure you negotiate the price of the car before subtracting the rebate.

See how low the dealer will go, but shop rates at your bank or credit union before you get to the dealer's finance-and-insurance office. Credit unions are stepping into the tight-credit breach with billions of dollars for auto loans at attractive rates; auto-loan rates recently averaged 6.4%, compared with 7% at banks.

To get the best deal, make dealers compete against one another. Start by e-mailing several dealers to see who has the vehicle you want at the best price. Base your negotiations on invoice price -- for each option as well as the car itself -- so that you have a consistent benchmark. If you hate to haggle, consider using Kiplinger's partner, CarBargains, the buying service of the nonprofit Consumers' Checkbook organization. For $200, CarBargains will get five dealers in your area to bid against each other for the car you specify.