This is the second of a two-part series on “How to buy a car in today’s market”

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 high 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.

Read part one, “How to buy a car in today’s market.” Read our complete new and used car buying advice sections.

—Jeff Bartlett