There are also disadvantages of leasing for a lessee, and those are listed below:

In case of deterioration in the financial position of the lessor or winding up of leasing company, the use
of asset may be deprived to the lessee.

There are various benefits of leasing which are prevalent while owning an asset such as investment,
incentives and depreciation allowance. The lessee is not entitled to such benefits in leasing.

The lessee cannot make any considerable changes in the asset or property as he is not the owner of the
asset or property.

Salvage value is the estimated amount of an asset’s worth at the expiry of its useful life.

The lessee cannot realize the salvage value of the asset at expiry of the lease period as he is not the
owner of the asset rather the asset is returned to the lessor.

If the lessee terminates the lease before its time period, certain penalties may be incurred upon by the
lessor.

For the lessee, the lease rentals include a margin as the cost of risk of disuse of the property. which is
why it is regarded as a form of financing at a higher cost.