The drawbacks of lease finance are as follows:

(i)    The lessee is not the owner of the asset. he gets only the right to use the asset. The asset may be taken back as per provisions of the agreement if the lessee is not in a position to pay the periodical lease rent.

(ii)    The lessee is liable to pay the lease rentals to the lesser at regular intervals.

(iii)    The lesser may put restrictions on the use of asset. Alternations or improvements in the asset may not be allowed.

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