How does the "yield" affect lessee decisions in leasing?

The concept of "yield" in leasing primarily pertains to the profitability of the lease investment. Yield is a financial term used to represent the income generated from an investment, expressed as a percentage of the investment's cost. In the context of leasing, the yield reflects the return a lessor can expect from the lease payments made by the lessee over the duration of the lease.

When lessees are considering a lease, understanding the yield can help them evaluate whether the lease is a financially sound decision. A higher yield may indicate a more favorable investment for the lessor, which can influence lessee negotiations regarding payment terms and conditions. Lessees are likely to make decisions based on whether the associated costs, including lease payments and any additional fees, are justified by the value they receive from the leased asset.

While yield does not directly determine the lease payment frequency, identify maintenance costs, or define the lease duration, it fundamentally impacts how both lessors and lessees approach the lease terms, ensuring that the investment aligns with their financial goals.