Competition makes '07 good year for auto buyers
By Terry Jackson • Bankrate.com

For buyers venturing into dealer showrooms looking at 2007 models, the same rules for smart shopping apply now more than ever. Before setting foot in a dealership, check out Bankrate's 5 must do's for auto shoppers.

In addition, consider these points:

• When faced with the choice between a cash rebate and cut-rate or zero-percent financing, it's almost always better to take the cash and apply it to the down payment. • If you're in the market for a new vehicle, this could be a good year. With the industry coming off a year when sales dropped by up to 1.5 million vehicles, showrooms will overflow with new and redesigned models and dealers will be in stiff competition to boost sales. That means they'll be cutting prices and offering incentives on all but the most popular models. • Sometimes it's wise to be a contrarian and so this may be a good year to buy a truck or sport utility vehicle. As a result of record-high gas prices last year, demand for gas guzzlers dropped precipitously. Now, with gas prices headed down toward the $2 mark, the savings on a purchase may outweigh the savings on fuel -- particularly if you don't drive many miles. • Speaking of miles driven, be careful if you choose to lease your new vehicle. Most of the attractive lease offers you may see in advertising are based on driving 12,000 miles per year -- some offer only 10,000 miles. But the average U.S. driver puts more than 15,000 miles a year on a car. If you are an average driver, you could wind up paying thousands of dollars in mileage penalties. • Keep a close eye on the option list. The extra goodies can substantially drive up the price and return little or no extra money at trade-in time. • If you do decide to take the plunge in 2007, don't fret about buying a vehicle that's new to the market or has been substantially redesigned. Thanks to computer-aided design and modern computer assembly, the gremlins that once plagued new models have been largely eliminated. • Keep a close watch on the happenings in Washington and Detroit. Changes in Federal Reserve monetary policy could change the financing deals. If car and truck sales fall, manufacturers may soon follow with price cuts and incentives. • Avoid buying more vehicle than you need or can afford, and keep the financing terms as short as possible.