Question

• Why Do Companies Lease Rather Than Buy?
• Must consist of 150-200 words

Answer 1

There are two alternatives available to a company while investing in acquiring an asset. One of the ways is leasing an asset and another one is buying the same. In such a case cost is a major factor in acquiring the asset. In addition to saving money, there are many reasons for which leasing is a better option than buying an asset. Some of such reasons are as follows:

1) Leasing is considered as a long term commitment and it incurs high cost in terms of interest inclusion and hidden costs. However, there are various additional options available in leasing in terms of upgrading of technology, schedule of service and maintenance in case of breakages and earning money's worth. These options are not available in case of buying at a cheaper price for earning profit. Also buying is less flexible than leasing.

2) Leasing gives the option to decide whether to claim full ownership of asset or return the same to lessor. Thus, unlike buying, there are lesser responsibility of ownership of an asset involved which provides fewer complications in dealing with the asset.

3) Leasing develops a strong bond and understanding between lessor and lessee which helps in expanding its collaborations and deals in other parts of business and connecting more often with clients.