Leasing instalments and risk
One particular feature of an operating lease arrangement is that the lessor’s investment costs will only be amortised through leasing of an asset several times over or its subsequent sale. For the lessee, this means low monthly leasing instalments. This is because its relatively short leasing period only needs to refinance a portion of the investment costs – and because the leased machinery, for instance, is financed with an open residual value. In an operate leasing arrangement, it is thus the lessor who bears most of the asset and investment risk.