Pros and Cons of Leasing vs. Buying: How are the Leasee and the Leasor Affected
This study will take a look at this question from the perspective of the lessor and the lessee. In the final analysis, it will be argued that the decision to lease or purchase is largely dependent on the circumstances of the lessee. As such, there are lessons to be learned from the role of leasing in organizational finance. From the experience of firms, it can be concluded that smaller firms lease so that they can finance their growth, or simply allow them to remain solvent. For larger companies, however, leasing is generally a calculated decision used by sophisticated financial managers to minimize their after-tax cost of capital. Applied to automobile financing, some people will lease because they have no other choice; i.e., they cannot afford to purchase. 8 pgs. 13 f/c. 7b.
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