What are the advantages of lease financing?

Lease financing has following advantages

a. To Lessor:

The advantages of lease financing from the point of view of lessor are summarized below

Assured Regular Income:

Lessor gets lease rental by leasing an asset during the period of lease which is an assured and regular income.

Preservation of Ownership:

In case of finance lease, the lessor transfers all the risk and rewards incidental to ownership to the lessee without the transfer of ownership of asset hence the owner­ship lies with the lessor.

ADVERTISEMENTS:

Benefit of Tax:

As ownership lies with the lessor, tax benefit is enjoyed by the lessor by way of depreciation in respect of leased asset.

High Profitability:

The business of leasing is highly profitable since the rate of return based on lease rental, is much higher than the interest payable on financing the asset.