What is the key benefit of an installment purchase?

The key benefit of an installment purchase is that title passes to the lessee with multi-year payments. This means that as payments are made over time, the lessee gradually gains ownership of the asset. This structure allows the purchasing entity to acquire the asset without needing to make a significant upfront payment, thus making it more financially feasible to obtain and utilize expensive assets.

In addition to the financial flexibility this arrangement provides, it also creates an incentive for the lessee to maintain and care for the asset since they will eventually own it. This contrasts with leasing arrangements where ownership does not transfer, and the lessee may not have the same level of motivation to invest in upkeep.

In the context of the other options, the benefit of retaining ownership by the lessor is common in traditional leasing scenarios but does not apply to installment purchases, as ownership is intended to transfer to the lessee. Similarly, while payments in installment purchases can be structured in various ways, including potentially annual payments, that isn't a defining feature of the installment purchase itself. Lastly, installment purchases may involve a combination of principal and interest in their payment structure, but dividing lease payments in this way is not exclusive to installment purchases and can also apply to leases. Therefore, the focus on title transfer with