Which is the best way to buy your next vehicle? This is the million dollar question. There really isn’t a right or wrong answer. It all depends on your specific preference.

Leasing is for you if you like lower monthly payments, a new car every 3-4 months, drive an average number of miles, if you like having a car always under warranty.

Buying is for you if you like the idea of ownership, you plan to keep you car for a long time, and you don’t mind the cost of repairs once the warranty has expired.

Before you make your decision to buy or lease make sure you fully understand the exact terms involved with either choice.

Leasing – When you lease, you pay only a portion of the vehicle’s cost. Since you are only paying for the car while you lease it, payments are 30% - 60% less. In most cases you have the option of not making a down payment, and may only pay only pay taxes only on your monthly payments. Your first payment will be due at the time you sign your contract.

Leasing is made up of two parts; the finance charge and the depreciation charge. The finance charge is the interest on the money the dealership has tied up in your car while you are driving it. You repay part of the money in your monthly payments, and repay the remainder when you either buy or return the vehicle when the lease term ends.

Buying – When you take a loan to buy the vehicle you pay for the entire cost regardless of how many miles you drive. You usually need to make a down payment, and must pay the sales tax upfront. Your first payment will be due one month after you sign your contact.

Loan payments also are made up of two parts; the finance charge which is the interest on the loan, and the principal charge which is what you still owe on your vehicle. The remainder of each principal payment goes towards your equity. Equity is what you will receive when you sell your car. High mileage and the longer you own your car will reduce your total equity.

So is it better to lease or buy? Again Its personal preference. Below is a table created to show you the advantage of each.

The biggest mistake you can make is to negotiate the sales price in terms of monthly payments. Every single dealer we spoke with agreed that each of their salesman’s first tasks is to uncover your monthly budget. It's in their interest to finance your car through them. It's in their interest to focus all negotiations around that financing. That's why, when you're discussing the sale price, the sales person will probably want to talk to you about your "desired monthly payment." If you give them your monthly budget you have just lost! Our Advice: Only negotiate the price of the car. You must negotiate in two phases: first for the price of the car, then for the financing or the value of you trade in.

Separate all items that are part of the negotiation. The dealer will want to lump all of the terms together and make it seem like you’re getting a bigger deal then you really are. These are the items you want separated and detailed.

• The final price of the car you are buying.
• Taxes/Licensing Fees.
• The discounted amount you’re receiving off the sticker price.
• The dollar amount of the rebate or factory incentive.
• The dollar amount of the dealer marketing support.

Just like buying anything there are sometimes certain fees that you will always have to pay. These two fees our something that you will not be able to negotiate with the dealer.

• Applicable Sales Taxes & Title Fees

These charges are non negotiable and all of the money is sent to the State, and Federal Government. No way to get around these fees.

• Destination & Delivery

This is the cost of shipping the vehicle from the plant where it was built to the dealer's lot. The cost is typically $400 and is usually included on the sticker.

Add-ons You May Want To Think About.

Some of these products may appeal to you. Instead of purchasing right away, ask the business manager to provide you with information so that you can read at home, and let them know in a couple of days. This prevents you from purchasing things under pressure.

• Credit Life Insurance

A credit life-insurance policy covers your car payments if you die. Our advice: Buying life or disability insurance from an auto dealer just doesn't make a lot of sense. If this is something that worries you find a good life insurance agent instead.

• Accident & Health Insurance

Accident & Health insurance will cover the amount of your payment in the likely hood you become sick or disabled. Buying Accident & Health insurance from an auto dealer just doesn't make a lot of sense. If this is something that worries you find a good life insurance agent instead.

• Extended Warranties

Over the past decade the quality of vehicles has vastly improved. Most manufactures offer a very good manufacture warranty programs and the need of buying an extended warranty has decreased.

The only reason that we would recommend an extended warranty is if you plan on keeping the vehicle after the manufactures warranty has expired and you see are struggling to make the payments in the future.

If you are in a cash tight situation a extended warranty can help avoid agonizing over decisions over whether repairs need to be done or not. They may even save you from financial disaster.

• Car Insurance

If you plan on getting you car insurance through the dealer make sure that you shop for competitive rates first. We would recommend you checking out both Geico and Progressive first before making any decisions with you dealer.

• Fabric protection

The most common add-on dealers sell is fabric protection. Some dealerships will charge close to $200 for this service. There is no difference between what they sell and what you can easily but in the store. Our advice is to go buy a can of Scotch Guard

• Gap Insurance

Gap Insurance is extra insurance that will cover the "gap" between the actual value of your car at the time of the accident and the amount you still owe the finance company.

Most finance companies require you owners to have full coverage on your new vehicle, but gap insurance isn't usually included.

If your car is totaled or stolen within the first two years, you could be in for a nasty surprise, due to the rapid depreciation of new cars you could owe more than you car is worth.

We recommend buying this extra insurance if you plan to finance more than 95% of the vehicle.

• Paint Sealant

Your car paint is already protected with coatings right from the factory. If you take reasonable good care of you car you should not need to pay for this extra protection.

• Rust Proofing

These days cars are rust-proof enough right out of the factory, to last longer than anyone is likely to keep a car. Our suggestion is unless you have some extreme reason to expect a rust problem you should probably pass on this add-on.

• VIN Window Etching

Every 23 seconds a vehicle is stolen in the country. Most police departments and insurance companies will tell you that the most effective anti-theft device for your car in VIN window etching. Car dealerships charge anyway from $150 - $300 for this service and in most cases only will cost them around $14. Our advice is to do this yourself. You can buy VIN etching kits for $20 and will only take a few minutes of your time.

• Maintenance Plans

When you buy a maintenance plane you are essentially pre-paying for all of your scheduled maintenance. We have found that most dealer plans will cost much less than paying full price for all of you upcoming scheduled maintenance. Our advice is to get pricing from the dealership on the normal maintenance costs and see if the plan is cheaper. Also make sure that you are comfortable with their service department and that the dealership’s location is convenient for you.

Add-ons The Dealer May Try To Slip Into Your Contract.

Before you sign any paperwork make sure that you carefully read all of it. Many times the dealer will try to slip extra costs into your paperwork with out you even knowing. Here are a couple of the usually suspects to watch out for.

• Dealer Preparation Costs

This is a dealer added fee. Most dealers cannot take it off the buyers/sales order however you should negotiate to take it off the price of the car. Industry averages for this fee are between $299 - $799.

• Dealer Protection Packag e

By using a name like "dealer protection package" dealers can front load their vehicles with add on products; like paint protection, fabric protection. This is very common with Toyota.

• Advertising

The cost of advertising is associated with running a business, which means the dealer should be paying it, not you. However, this doesn't mean dealers won't try to get you to pay. Read over your contract to make sure advertising fees have not been added.

• ADM (Additional Dealer Markup)

This is pure profit for the dealer and something that you should never pay. Sometimes dealers will try to add this on if the vehicle is in hot demand.