End of model year car-buying tips
By Terry Jackson • Bankrate.com

There are few things as exciting as new-model time for people who care more than a little about cars.

For those who can remember back a couple of decades, fall was a time of great car excitement. Dealerships covered their showroom windows as a ploy to build suspense, get people into the house to see the new models, and then hit them with the hard sell while they were dazzled by all the new sheet metal.

Now, year-round marketing has taken some of the edge off of the fall new-car season. There were a few new model vehicles in dealer showrooms as early as February. Nonetheless, the period from September to December is still when the bulk of the new models are introduced.

So as that magic time arrives, several big financial questions arise:

Are the last year's models great bargains? Every time I turn on the radio, I hear my local dealer screaming about being overstocked and offering a zillion dollars off the factory sticker to clear his lot.

Is this year's model worth the extra dough? If a new model has caught my eye, should I get it now and enjoy it for a full year while I can still call it a new car, or should I wait a few months and let the new-car fever subside a bit and see if better deals are offered?

Are all-new models risky? Price issues aside, what about the warning your father gave you about not buying an all-new model in the first year? "Give the factory a year to work out the bugs, and then get one,'' the old man used to say.

Dealing with the last question first, you can pretty much chalk up that advice as once valid but past its time.

There was a time when manufacturers, mostly those in Detroit, would develop a model on an internal timetable and ship it to customers even if things hadn't quite been smoothed out on the assembly line.

But today, because of the highly competitive nature of the business, manufacturers can't be so cavalier about quality. Sell someone a car that isn't quite ready for prime time and you can lose that buyer and probably everyone in their immediate family for years, if not forever.

That doesn't mean a few individual lemons don't make it onto dealer lots, but buyers today need not worry that they are the test dummies for manufacturers.

The first two questions are more complex and depend on what kind of a new-car buyer you are. Do you subscribe to the cliché, "You are what you drive?'' and need to have the latest hot vehicle in your driveway? Or are your new-vehicle purchases done about the time the government conducts a census -- once a decade? Are you a smart buyer who can hold the buy-it-now impulse in check for a few months in search of a good deal?

Let's deal with last year's models first. As you've been reading, almost every manufacturer has loaded up vehicles with rebates, incentives and zero-percent financing to sell off the leftovers.

But the second you take possession of that car, it's a year-old vehicle. In three years, when your heart gets stolen by the latest Whizbang, that '08 will have taken a bigger depreciation hit than if you had bought an '09.

Still, the leftovers should get a lot of consideration in these situations:

You're going to keep the car for more than five years. After five years, the difference of a year between cars in similar condition and mileage will usually be less than $1,000 -- and the deal you'll get on last year's model vs. this year's now will be greater than that.

You're going to lease the vehicle. If you get the initial purchase price hammered down as far as possible with rebates, incentives and discounts and lease through the manufacturer's finance arm, you'll pay considerably less per month and per mile driven for last year's model than you would for the latest model of the same car. Yes, the savings will be offset somewhat by a lower residual value on the older model, but that won't come close to the overall savings.

When it comes to deciding to take the plunge on this year's model, these are the factors to consider:

You put a lot of miles on a vehicle. You'll want the newest car you can afford because when it comes time to sell, you're going to be in the marketplace with a high-mileage vehicle and you'll need to stress the car's newer pedigree.

You usually trade cars every three or four years. OK, this is an expensive habit, but if it's yours, you'll want to get that full year of saying your car is the new model.

Never -- repeat, never -- commit to a new model and pay more than sticker price. Every year there are hot new vehicles that are in such instant demand that dealers charge more than sticker. As cool as it would be to be the first on your block to own the hottest new car, resist the urge. Because a year from now, after the manufacturer has pumped 35,000 of them out the door, the car you paid $5,000 or more over sticker to get will be worth exactly the same as one sold next May for sticker or maybe a little under.