Rent or Buy?
Posted by Gail | Filed under Smart Shopper
Sometimes buying is the only way to go: think tooth-brushes and underwear. But for just about everything else, there’s a rental option that could let you try before you buy. So when does it make sense to rent?
Everyone knows renting a movie is about 20% of the cost of buying the same DVD. Hey, you can watch 5 great flicks for about the same cost as buying one. So does the same thing apply to other stuff? Sure it does. And there are times when renting definitely has the advantage.
If you’re not sure your new acquisition will be fit you well then it may make sense to take a trial run. Sure that convertible looks really cute on you? But where will you put the suitcase or the cat-carrier? Better to try it on for a few weeks to see what the downsides may be. Ditto that expensive camera or sports equipment. How about that new gaming console?
My girlfriend, Jazz, decided against buying a car after we had the rent versus own chat. Turns out that since Jazz lives in the city and can get around just fine on transit, she’s way better off renting when she needs a car for longer jaunts. It’s also far more cost-effective for beginner skiers to initially rent equipment. It gives you a chance to hone your skills without brutalizing your own gear. And after you’ve mastered the basics, you can “try-on” more expensive gear to get a real feel for different lengths, styles and makes. When you go to buy your own stuff it’ll be an informed decision.
If you’re likely to use your new acquisition only a couple of times, then renting makes more sense than owning. Think power-washers, carpet steam-cleaners, camping gear, and myriad tools and equipment. That treadmill sitting under all those clothes might also fall into this category, even if that wasn’t your intent. And that time-share you bought… well, maybe it wasn’t the deal you though it would be.
And then there are those special occasions when you want to live large but your wallet doesn’t have what it takes. Rather than buying on credit, you could rent that designer dress. Hey, if you want to tool around in a vintage car with the top down and you’ve got the daily rate, make your dream come true.
Before you decide if renting or buying makes more sense, do the math. Figure out what the item’s cost per use will be before you bring it home permanently. Sure, that steam cleaner is on sale, but if you only use it two or three times it was no bargain. Before you whip out your credit card, divide the purchase cost of the item by the number of times that you expect to use it in a given time period. ?Knowing an item’s cost per use will help you to see whether renting or buying is the better financial move.
There are some things you should avoid renting. If you’re planning to rent-to-own, you’re likely going to end up paying double or triple the cost. So when I’m talking about “renting” is for temporary use, not a way to have everything you can’t wait to get your sticky little fingers on.
Sometimes it’s tough to find a place to rent, or shipping costs are prohibitive so renting locally is the only way to go. If you’re determined to have that jukebox for your honey’s 50th birthday bash, you may have to shop hard to find what you’re looking for. But you may be surprised at what’s available and how much less expensive it can be.
When it comes to renting, make sure you know the rules before you put down your money. Does the price you’ve been quoted include everything? Very often set-up costs are separate. Find out what happens if the item you’re renting is damaged while in your possession. Insurance may be offered to offset your liability, but if it isn’t, see if your credit card company offers rental insurance or if it will be covered under your home policy. If you’re trying on with the intent to possibly buy, see if you can buy the item at a discount once you’ve rented. And if you’re done with your rental sooner than you expected to be, can you get a refund on your rental fee?