The economy is sucking wind, home prices are tanking, and the stock market is scary. No wonder people are staying away from car-dealer showrooms. And that means it's a great time to get a bargain on a new car. Dealers still have to move the cars that roll off assembly lines, so many vehicles are going for near-invoice prices. As icing on the cake, carmakers have turned to low-rate financing and cash rebates.

For example, GM is spending $3,300 on incentives per vehicle (including cash rebates and subsidized rates and leases), compared with $2,800 a year ago, according to Edmunds.com. The Federal Reserve's recent rate cuts have made it easier for carmakers to offer low-rate financing. Zero-percent deals are mostly relegated to gas-guzzling pickups and giant SUVs. But a slew of vehicles are offered with rates of 2.9 percent or 3.9 percent for 60-month loans.

Rebates are also back, although you usually have to choose between the cash and the low interest rate. Again, the biggest rebates go with the biggest fuel burners, but you could recently get at least $1,000 back on a range of new vehicles, including the Lincoln MKX, Saturn Aura and Toyota Camry Hybrid. Even the 2009 Dodge Journey, a brand-new midsize crossover, is selling with $1,000 cash back.

With some vehicles, such as the Acura TL, the BMW 7 series and the Infiniti EX35, dealers have cash from the carmaker to use as they see fit — meaning that you can probably negotiate a great deal. Or you could choose a subsidized lease. For example, Honda was recently offering a 36-month lease on the Accord EX for just $239 a month with $2,900 due at signing.

What should you do if you have to choose between a rebate and low-rate financing? In general, if you're going to keep the car for three years or less, take the cash rebate and finance with a traditional loan, says Jesse Toprak of Edmunds.com. But to be sure, run the numbers with the calculator at kiplinger.com/tools.

Lenders still have money to grease auto sales, thanks in part to shots of liquidity from the Fed. Borrowers with credit scores below 700 may need more documentation and may pay a higher rate than they would have prior to the subprime-mortgage mess. But anyone with a credit score above 700 is likely to qualify for low-rate financing, says Toprak.

Will the deals last? Probably. Carmakers expect even fewer sales than last year and are not likely to curtail the come-ons. If you want the best bargains along with your choice of options and color, shop before August. After that, the deals improve but selection may be sketchy.


Mark Solheim is a senior editor at Kiplinger's Personal Finance magazine. Send your questions and comments to [email protected]