In contrast to a credit-financed purchase, the user of Crédit-bail or location capital goods is not its legal owner. For this reason a lessee does not have to carry these goods as an asset on his balance sheets.

The lessor - and not the user of the leased capital goods - finances the purchase cost. Thus lessees do not become less liquid and/or have to enter into third-party financing of the investment object (e.g. to pay for one or more company buildings) well in advance of its possible initial use. Instead, it is possible to finance the cost of capital goods from the income generated by their use over time. This approach is in accordance with the "pay-as-you-earn" principle.

Important differences between crédit-bail and location
Crédit-bail	Location
Lessee is granted a purchase option at the end of the lease. This option is a contractual one. Usually the price of the purchase option is so small that the Lessee decides to purchase the equipment.	Lessee has no purchase option. At the end of the lease, he may return the equipment to the lessor or extend the lease. From an accounting point of view, credit-bail exposure is declared by the lessee in the appendix to the balance sheet. For the location version, exposure is off-balance.