Three important benefits are available to the lessor:
1. Interest Revenue. Leasing is a form of financing. Banks, captives, and independent leasing companies find leasing attractive because it provides competitive interest margins.
2. Tax Incentives. In many cases, companies that lease cannot use the tax benefit of the asset, but leasing allows them to transfer such tax benefits to another party (the lessor) in return for a lower rental rate on the leased asset.
3. High Residual Value. Another advantage to the lessor is the return of the property at the end of the lease term. Residual values can produce very large profits. At the same time, if residual values decline, lessors can suffer losses when less-valuable leased assets are returned at the conclusion of the lease.