Financial lease transfers substantially all ownership risks and rewards, operating as a loan like full payout financing arrangement. A financial lease is a long term, generally non cancellable arrangement where the lessor buys an asset and the lessee makes obligatory payments sufficient to amortise the lessor's investment; the lessor acts as financier, title may remain with the lessor, and substantially all risks and rewards of ownership pass to the lessee, who bears maintenance, obsolescence and economic life risks, while the lease is treated economically as loan financing rather than mere asset rental.