The basic difference between leasing a car and buying it is that the former pays for the period the car is used, whereas the latter pays for the entire cost of the car. Thus, if you lease a car, you only have to pay for the period that you are going to use the car. After the period is over, you can turn the car in and lease another one. But when you buy a car, you own it.

Suppose a car costs $20,000 and you lease it for two years. If the value of the car after this period, taking depreciation into account, were estimated to be $12,750, then you would have to pay only the value that you have used up. This would be $11,250. This amount can be paid in monthly installments. Many provinces add a sales tax to the monthly installments. However, in an outright purchase, you pay the entire cost of the car or take a loan to pay for it. To repay the loan, there are monthly installments calculated on the entire value of the car, which