It's got everything you wanted and more. Now comes the hard part. How are you going to pay for your brand new toy? Or, more to the point, do you buy or lease?

The answer isn't as simple, but experts say it's not as hard as you may think -- so long as you answer a few simple questions before you head down to the local dealer:
 

How long will you keep the car?
"If you like to drive a new car every two or three years, leasing is preferable to buying," says Art Spinella, president of CNW Market Research, a forecasting firm in Oregon.

"If you like to keep a car until the wheels fall off, buy it."

You should never lease a car beyond its warranty period -- and preferably for only three years. Ideally, one of the reasons you're leasing is to always have a car under warranty. If you lease it beyond the warranty period, you're going to have to pay for repairs and maintenance items such as tires.

"You want to use a vehicle up to the point where you can drive it without spending any money for major repairs," says Spinella. "You don't want to have to deal with new tires, major tune-ups and other big expenses."

Do you prefer owning?
The biggest advantage to purchasing your vehicle is that you own an asset that you can turn around and sell. There's also an end to your payments. When you lease, you turn in your vehicle but probably need another, and are then saddled with more payments. For that reason, once you start leasing it's hard to stop. When you finish paying off a car you purchased, you have the option of getting a new one and taking on a new set of payments or sticking with the car you have, payment-free. 
 

Again, if you like to get a new car every year, it's cheaper to do it by leasing. Some people simply like the idea or the feel of owning. Others enjoy knowing they're using the best years of the car and soon will have another new one. It's up to you. Remember, however, that the equity you build with a purchase usually is used for the down payment on the next purchase.

Are you short on cash?
Arguments can be made either way on whether it's cheaper to buy or lease. It depends on your individual circumstances. But one thing's for sure: Leasing makes for lower monthly payments and typically no down payment. The reason is simple. Let's say a new Honda Accord LX costs $24,000. For example, if you make a $3,000 down payment and buy the car you have to pay off $21,000 in 48 months at 2.9 percent interest. That means a monthly payment of $473.22. Even if you trade-in your four-year old car worth $10,000 -- financing $14,000 -- your payments will be $315.48.

But if you choose to lease the same vehicle -- with the same interest rate and the same down payment -- you don't have to pay off the $21,000 over four years -- you only pay off the amount the car depreciates over the four years. Here's how it works: Take the $21,000 and subtract from that the residual value -- how much the lender predicts the car will be worth at the end of the four years. Let's say $10,000. So, with a lease you'll have to pay $11,000 ($21,000 less $10,000) divided by 48 months, or only $247.88. When you buy a new car, the value of the car depreciates dramatically as soon as you drive it off the dealer's lot because it immediately becomes a "used" car. So, if you buy a new car every few years, you would regularly incur big losses on your investment in new cars. By leasing, you avoid this significant loss of value.

How many miles will you drive?
This one's easy. If you're likely to drive more than 12,000 miles a year, think long and hard before leasing. Purchasing offers more flexibility, allowing consumers to drive as many miles as they want. Leases usually limit annual mileage from 10,000 on the short end to 15,000 on the generous end. They do that because they want the car to be worth its residual value or more when you turn it back in. If you go over that limit, you'll have to pay a penalty, typically 10 cents to 20 cents a mile. You can negotiate for more miles upfront, but then you'll have to pay more because the residual value will be less. Now 10 cents may not sound like much, but 5,000 miles could cost you between $500 and $1,000 cash at the end of the lease.

Do you take good care of your car?
Similar to the mileage situation, the way you care for your car is critical. If your cars are in great shape after three or four years, you're a good candidate for leasing. But some people just beat cars. If you haul equipment, tools, or a team of muddy soccer players around, think twice. "The wear-and-tear charges will amount to hundreds of dollars, which you'll be responsible for paying," says Spinella.

How's your credit rating?
There's more risk to the lender in a lease than a purchase because there's usually no down payment and low monthly payments. Because they have more at risk, the lenders normally require better credit ratings than they do for people purchasing. If you plan to lease, check your credit scores before you go to the dealer and, if necessary, try to get your scores improved.

Is your lifestyle likely to change?
While life is certainly unpredictable, consider whether your lifestyle is likely to change during the course of the lease. Do you plan to move to a new house? Much further from your job? Do you have a teenager who's going away to school who won't be adding extra miles? "Let's say an elderly man leases a vehicle and finds -- in the middle of the lease -- he can't drive any more for health reasons," says Gentile. This is a contract -- a long-term commitment -- and another reason not to lease a vehicle for more than three years. In a lease, you can't sell the car, and transferring the lease to someone else can be difficult -- and expensive.