Generally, finance lessors try to reduce uncertainty as much
as possible. For example, they may try to make sure that at any
given point in the lease the asset will be worth more than they are
owed, so they can be reasonably sure of getting their money. They
also usually protect themselves against such things as future
interest rate or tax rate or rule changes by making the lessee
accept any consequential adjustments to the lease rentals which
flow from changes to the lessor's net present value computations.
In return the lessee gets the cheapest terms currently possible but
at the risk of paying more later.
If a finance lessor guaranteed fixed rentals throughout the
lease it would have to cover itself against the tax or interest
rate risks by building in larger margins. In the UK market the
parties prefer to leave the interest and tax risks with the lessee.
But some US-based groups trading in the UK may prefer to use the US
system and pay more for certainty.
