What is the primary goal of a finance lease?

The primary goal of a finance lease is to acquire the use of an asset. In a finance lease, the lessee obtains the right to use an asset for a substantial portion of its useful life, while the ownership typically remains with the lessor. This arrangement allows the lessee to benefit from the asset without needing to purchase it outright, which can be particularly advantageous for businesses that require certain equipment or property but do not want to allocate substantial capital to purchase those assets.

This leasing structure can also provide flexibility in managing cash flow, as lease payments can be viewed as operational expenses instead of capital expenditures. Additionally, it allows businesses to conserve cash for other investments while still having access to the necessary resources to conduct operations effectively. Consequently, the focus is predominantly on the utilization of the asset over the ownership itself.