(MONEY Magazine) – As Cleve and Cindy Thompson just happily discovered, car buyers are in the driver's seat these days. When the Glide, Ore. couple began shopping for a 1989 Thunderbird LX, they were put off by the sticker price of $18,300 and Ford's measly $600 rebate. But after shopping around at six dealers, the Thompsons drove off in a loaded T-bird for only $16,900 -- a mere $1,000 over dealer cost. Roughly 90% of new cars and trucks now come equipped with sales incentives. The lures range from serious to silly -- everything from cash rebates and low- cost financing to no-cost jaunts to Hawaii and free circus tickets. Volvo has even tested a program allowing United Airlines' frequent fliers to apply mileage credits toward discounts on several models. And look for the frenzy to heighten during August and September, when many dealers must push their 1989s off the lots to make room for 1990s. ''This is the best time in years to buy a car,'' says Christopher Cedergren, senior analyst at J.D. Power & Associates, the Agoura Hills, Calif. auto research firm. Why is the auto industry so desperate? The figures tell it all: in mid-June, sales of domestic cars fell 10.9% from a year ago, and for 1989, car and truck volume is expected to drop to a five-year low, creating an inventory glut. In a sense, automakers are victims of their own success. After years of strong sales stimulated by incentives, the market has become saturated. Clearly, manufacturers have no choice but to keep up promotion offers. The Big Three are pitching 2.9% financing plus rebates of $500 to $1,500. Deals extend even to deluxe models. Cadillac gingerly called its recently expired $1,000 rebate a ''performance bonus.'' For a while Jaguar -- Jaguar! -- offered $5,000 rebates on its XJ6 sedan (list price: $44,500). But if you are in the market for a new car, don't be carried away by the crazy come-ons or the alluring rebates and financing terms. ''Many dealers will try to get you to settle for a rebate or loan off a high sticker price,'' warns Jack Gillis, author of The Car Book (Harper & Row, $8.95). ''Ignore the incentives and go for the lowest price.'' To do that, start your shopping expedition by selecting a car and then determining the dealer's wholesale price, known as the invoice cost. You can get a rough idea of invoice costs by checking Edmund's New Car Prices and Foreign Car Prices, available in most libraries. For detailed information on , models and options packages, order printouts from the Consumer Reports Auto Price Service (P.O. Box 8005, Novi, Mich. 48050). The cost is $11 for one car listing, $20 for two and $7 for each additional car. Specify makes, models and styles. Next, bargain like a merchant in a Marrakesh souk for the lowest possible markup. Tip: the average markup on a moderately popular domestic model is about 15%, a bit less on imports. But you may be able to talk a dealer down to 2%. After negotiating a fair price, you should still be able to swing a loan whose interest rate is below the national average of 12.28%. But watch out particularly for financing deals that sound too good to be true. Some dealers, for example, promise to cut your first-year monthly payments in half. Fine print on those ads explains that the interest rate on such a deal may be a steep 12.9%.