Obsolescence Risk is Averted
In a lease arrangement, the lessor being the owner, bears the risk of the lessee and the always free to replace the asset with the latest technology.
To the Lessor
A lessor has the following advantages:
The lessors interest is fully secured since he is always the owner of the leased asset and can take repossession of the asset if the lessee defaults. As against it, realizing an asset secured against a loan is more difficult and cumbersome.
The leasing business is highly profitable since the rate of return is more than what the lessor pays on his borrowings. Also the rate of return is more than in case of lending finance directly.