By contrast to - credit-financed - purchase, in the case of leasing and hire the user of a capital good is not at the same time its legal owner. For this reason lessees and hirers do not have to carry this good as an asset on their balance sheets.
It is not the user of a capital good who finances its purchase cost but the lessor/hirer-out. Thus lessees/hirers do not have to undergo an outflow of liquidity and/or enter into in third-party financing of the object invested in at a time - for example, in the case of company buildings - well in advance of its possible initial use. Instead, it is possible to finance the cost of a capital good from the income generated by its use over time, in accordance with the principle of "pay-as-you-earn".

Important differences between leasing and hire:
Hire	Leasing
As a rule, the hirer-out alone decides the time of purchase and the condition and supplier of the capital good. The nature of the agreement and the market situation may mean that changes in hire rates and periods of hire especially cannot be calculated in advance. Further imponderables are continuous fitness for use - because, in contrast to leasing, maintenance is usually the responsibility of the hirer-out - and suitability for use - because, for example, changes in market conditions call for a change in use.	The lessee - together with the lessor - defines the requirement profile for the object invested in and fixes the purchase date to suit his specific needs. He selects the manufacturer, conducts the purchase/agreement negotiations, if necessary, and sees to the transfer or, in the case of a company building, management of the construction himself - or, depending on his individual requirement, he can leave all or part of this work to the leasing company. Payments for use and the period of use are fixed for the entire term of agreement from the very outset. This means that definite planning is possible. The shared interest of lessor and lessee in an optimum re-utilisation - either by the user hitherto or third parties - of the object invested in after expiry of the leasing agreement at the same time ensures that the suitability of the leased object for its destined use and its suitability for the market are ensured at all times.