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:

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