Lease finance is easy to get than getting loan for buying all fixed assets.
Monthly rent payment for lease finance will be
operating expenses. It will be
allowed to deduct total income. So, company can get tax benefits in lease financing.
It can show as invisible debt of company out of its balance sheet. You can show lease finance in the footnote of balance sheet, if you did contract directly with the owner of asset.
One of major important point is that it is more flexible way of finance. You can fix your
need of asset and get it one lease through lease financing.
A study from IFC has
revealed that 30% of total share of lease financing as investment of
fixed asset is of emerging and developed economies and now 15% of developing countries.
Importance of Leasing for developing country:
In the case of a developing country, lease from is beneficial for importing equipment like Ships, aircrafts etc. instead of borrowing. This will protect a better image of a nation than a borrower with no pressing service charges for unpaid loans.
Government should make favorable laws so as encourage availability of lease finance for
importing plant, machinery and equipment by the
private sector companies to accelerate the
pace
of industrialization and self-reliance in production of capital goods.