Balanced Cash Outflow: The biggest advantage of leasing is that cash outflow or payments related to leasing are spread out over several years, hence saving the burden of one-time significant cash payment. This helps a business to maintain a steady cash-flow profile.
Quality Assets: While leasing an asset, the ownership of the asset still lies with the lessor whereas the lessee just pays the rental expense. Given this agreement, it becomes plausible for a business to invest in good quality assets, which might look unaffordable or expensive otherwise.
Better usage of capital: Given that a company chooses to lease over investing in an asset by purchasing, it releases capital for the business to fund its other capital needs or to save money for a better capital investment decision.
Tax Benefits: Leasing expense or lease payments are considered as operating expenses, and hence, are tax deductible. A company saves tax on the lease rental paid as with an operating lease, all rentals (Principal + Interest) are expensed off whereas in loan only interest portion is expensed off.