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While there are actually quite a few ways to tame (or induce) understeer and oversteer, using adjustable sway bars is my favorite way of manipulating these characteristics, since you can't in many of the car driving games out there today. Sway bars are reliable equipment which produce generally similar results in different situations. You can accomplish a lot by adjusting tire pressures as well, but tire pressure adjustments can have variable results depending on tire temperature.
Generally speaking, understeer and oversteer are the characteristics you'll be dealing with just like in other racing games. To tame oversteer, you want to actually make the rear sway bars softer. To tame understeer, you'll want to make the front sway bars softer. In theory you can also achieve this by tuning the opposite ends. For example, you can tame oversteer by making the front sway bars stiffer. This, however, can have side effects that you might not anticipate, so it is best to deal with the end of the car that you're having trouble with directly.
When tuning the sway bars, tune in small doses. Remember that Forza 3 has the ability to tune in the middle of a test drive, so take advantage of that feature.