Get an End-of-Year Deal on 2012 Cars

One of the best ways to save money on a new car is to buy at the end of the model year. As dealers try to clear their lots to make way for new inventory and to meet sales goals, they'll be in the mood to bargain.

SEE OUR STORY: 2013 Cars: More Models, Fewer Incentives

The later in the year you shop, the better the deals. But if you're picky about colors or options, get moving. The sooner you start shopping, the more models you'll have to choose from.

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Where the deals are. The type of vehicle you're looking for will dictate the size of the discounts you'll find. Small cars and crossovers have been in demand due to high gas prices, so steep discounts are hard to come by. But big sedans, SUVs and minivans are ripe for a deal.

According to estimates by TrueCar.com, an automotive data firm, the average transaction price of a Chevrolet Impala will be 11% off sticker price this fall, a Ford Edge will be 14% less than sticker, and a Kia Sedona minivan will carry about a 10% discount. "If you need a family hauler, it's a great time to be in the market," says Jesse Toprak, vice-president of industry analysis at TrueCar. "The larger the vehicle, the larger the discount."

Manufacturers have cut back on cash-back offers, which trim profits. Cash offers also dampen resale values because the formulas that predict used-car values reflect such discounts. But low-rate financing and lease deals are plentiful. Automakers offer incentives on the vehicles they most want to move, and vehicles getting a redesign in the upcoming model year often get a sweetener. For example, Honda is offering 0.9% financing for 60 months on the outgoing Accord, and Nissan offers the same terms on the 2012 Altima (both have been redesigned for 2013). If you plan to trade in the car within three years, keep in mind that you'll take a bigger hit on the resale value if you buy the older model instead of the redesigned version.

Because the used-car market is still hot, carmakers are offering low-cost leases—for 24 months as well as the standard 36 months—on vehicles they want to recycle into the certified used-car market down the road. Lease a Hyundai Santa Fe for $269 a month for 36 months (it's redesigned for 2013) or a Volkswagen Jetta for $159 a month for 36 months. Even pricey electric vehicles are quietly being leased for less. Chevrolet offers the Volt for $269 a month for a 24-month lease, and Nissan's Leaf goes for $249 a month with a 39-month deal. Luxury carmakers typically roll out lease deals on outgoing models close to the holidays.

Despite less cash on the table, there's room to negotiate. Stair-step incentives—back-end bonuses for dealers that meet certain sales targets, often by the end of the month—are persuading dealers to accept less for a vehicle upfront, knowing the carmaker will reimburse them later. Unlike factory cash rebates, you won't find these incentives touted in ads. "There's more flexibility in price than the incentive numbers you'll see," says Jessica Caldwell, senior director of pricing and industry analysis for Edmunds.com. You can find dealer as well as customer cash rebates at www.edmunds.com/car-incentives.

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This article first appeared in Kiplinger's Personal Finance magazine. For more help with your personal finances and investments, please subscribe to the magazine. It might be the best investment you ever make.