Whether you're out to lease or buy, your primary goal is to negotiate the lowest possible price. And to get the best deal, you must drive a hard bargain and be willing to shop till the price drops.

Set a target price

As every car shopper since Fred Flintstone knows, the sticker price on a car is just a suggestion, a place to start. With a few exceptions -- the Saturn being the best known -- the actual transaction price is set by bargaining, and the better you bargain, the better the price you'll get. It helps to have a target price in mind right from the start: a price that gives you a good deal and lets the salesperson make a living.

A number of publications can help you set a target price. Every year Kiplinger's Personal Finance magazine lists hundreds of new models, with sticker price, dealer cost, and target price for each. The important thing you're looking for at this point is complete pricing information on all the models you're considering. Your target price will be somewhere between the sticker price and the dealer cost, but keep in mind that you may pay more or less depending on the demand for the car or truck you want. Large dealerships are often in a better position to bargain because they get volume discounts from the auto manufacturer.

Shop alternative nameplates

You can sometimes find a way to save by comparing similar cars built by different divisions of the same manufacturer. So-called "twinned" cars aren't easy to spot, and it would be misleading to suggest that the less expensive car has all the goodies of the more expensive one.

When you compare twins, ask yourself: Does the extra money buy more performance and durability, or simply a nameplate?

Check inventories

When dealers have more cars than they can reasonably expect to sell within 60 days, it's generally considered a buyer's market. You can check inventory in Automotive News, a weekly industry publication that is available on some newsstands, in large public libraries and online.

When inventories get high, car manufacturers may begin offering rebates, low-cost financing, and subsidized leases. You can find an up-to-date list of incentives in CarDeals, a semimonthly publication that typically cites more than 200 deals. Automotive News also publishes the latest rebates each week, and Edmunds.com lists rebates and incentives.

Shop for discounts

If you're offered a choice between a cash rebate or the low-rate financing, a $1,000 rebate will be worth more if the financed amount is $15,000 or less.

Cut-rate financing becomes increasingly more attractive at higher loan levels. Use this calculator to see just how attractive.

Hire some help

If you're not confident about your bargaining skills-or if you simply don't like to haggle-you may want to turn to a car-buying service. For a $190 fee, CarBargains will do the legwork for you, getting competitive bids for the car you want from at least five dealers in your area. CarBargains is sometimes able to get lower prices than other car-buying services partly because it receives no money from dealers and thus is working only for you.

Dealers pay fees to some other services for the privilege of being the sole dealer the service uses in the area. This really shouldn't matter to you if you get a good deal.

Join a club

Warehouse clubs, such as Costco or Sam's Club, and by affinity groups, such as credit unions and the American Automobile Association (AAA) offer new car-buying programs that give you a discount off the sticker price without haggling at participating dealers.

Club buying programs are typically free to shoppers, but the participating dealers pay the service either a flat advertising fee or a commission on every sale the service steers their way. Because these programs usually work with only one dealer per car line per geographic area, there's no competition. So while the price you get may be a good one, it may not be the best price that's available in your area.

Sealing the deal

Be careful not to lose the money you've saved negotiating a good price when you get to the finance and insurance (F&I) office, where dealers will offer your a car loan and tack on charges as document preparation, processing, dealer prep, and national advertising fees. Dealers look to these extras as their chance to win back some of the concessions they made on the price. Here's what to know when presented with such extras.

Financing packages. Call local banks, savings and loans, and credit unions for their lowest rates. Be prepared to get your own financing if you don't like the dealer's deal. Customers with marginal credit ratings should be especially wary. You should expect to pay higher rates, but not as high as some dealerships charge.

Document prep and other fees. Dealers are paid by the factory to prepare new vehicles, so if you pay a dealer-prep charge, the dealer gets paid twice. And national advertising is a normal business expense for manufacturers, so it shouldn't be listed on the invoice or added to your final bill by the dealer. (In many states it's illegal for manufacturers to charge dealers for national advertising.)

An invoice charge listed as "local dealer advertising/marketing association" usually represents an actual charge incurred by the dealer to pay for group advertising. The factory invoice has a box for this item, and the dealer enters the amount, which is typically 1 to 2% of the invoice price. Dealers consider this to be a legitimate part of their "invoice cost," so if you're being offered a deal that's at or below invoice, you'll probably have to pay it. But if the deal is for a significant amount over invoice, consider this charge to be part of the dealer's gross profit and negotiate accordingly.

Be sure to say no to any of the following -- they're not worth the additional money: extended warranties, credit life insurance, undercoating, fabric protection and rustproofing.

Tune Up Your Car-Buying Skills

How to Negotiate a Lease

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