Question

Why do you think leasing is as po pular as it is in practice? Why do you think leasing is as popular as it is in practice?

Answer 1

Why Leasing is as popular as it is in practice:

Perhaps the greatest benefit of leasing a asset is the lower out-of-pocket costs when acquiring and maintaining the asset. Leases require little or no down payment, and there are no upfront sales tax charges. Additionally, monthly payments are usually lower, and you get the pleasure of owning a new asset every few years.

Leasing is becoming a preferred solution to resolve fixed asset requirements vs. purchasing the asset. While evaluating this investment, it is essential for the owner of the capital to understand whether leasing would yield better returns on capital or not.

And in addition to above points, following are the Advantages of Leasing over Buying the Asset:

1. Balanced Cash Outflow

2. Quality Assets

3. Better Usage of Capital

4. Tax benefits

5. Off balance sheet debt

6. Better planning

7. Low Capital Expenditure

8. No risk of obsolescence

9. Termination Rights

Therefore, due to the above advantages, Leasing is as popular as it is in practice.