Trading on Equity
The lessor usually carry out his operations with greater financial leverage. That is, he has a very low equity capital and use a substantial amount of borrowed funds and deposits. Thus, the ultimate return on equity is very high.
High Growth Potential
The leasing industry has a high growth potential. Lease financing enables the assets to acquire equipment and machinery even during a period of depression, since they do not have to invest any capital. Leasing, thus, maintains the economic growth even during a recessionary period.
Limitations of Leasing
Lease financing suffers from certain limitations too: