Buy or Rent? It Applies To More Than You Think

rent-vs-buy-gvoSometimes buying is the only way to go: think toothbrushes 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, and when does it make sense to buy?

More For Your Money

Everyone knows renting a movie is about 20% of the cost of buying it, even online. Hey, you can watched five 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 upper hand.

If you’re not sure your new acquisition will fit you well, then it may make sense to take a trial run. Are you sure that convertible looks really cute on you? But where will you but the suitcase or cat-carrier? Better try it on for a few weeks to see what the downsides may be. Ditto to that expensive camera or sports equipment. And that theory definitely applies to that new gaming console.

Plus One For Renting

My girlfriend, Jazz, decided against buying a car after we had the rent vs. 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 a more 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 thought 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.

Think Long-Term When Choosing To Buy or Rent

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 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”, it’s for temporary use. It’s 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.

Protect Your Assets (Even When They Aren’t Yours)

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? Are set-up costs included? The same thing goes for buying – especially when purchasing a home.

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’s 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 rate once you’ve rented. And try to negotiate a refund on your rental fee if you’re done with your rental sooner than you expected to be.

Category: Budgeting | Tagged in:

Apr 26, 2017

About Gail Vaz-Oxlade

Gail Vaz-Oxlade is the Gemini-award winning host of Til Debt Do U$ Part, Prince$ and Money Moron. She hosts The Monday Night Late Shift on NewsTalk1010 where she talks about life, the universe & everything. Gail blogs daily at gailvazoxlade.com and contributes to moneyproblems.ca. Gail is determined to eliminate financial illiteracy in Canada, and encourages people to join MyMoneyMyChoices.com to raise their Money IQ. Her books include: Debt-Free Forever, Easy Money, Never Too Late, Money-Smart Kids, It’s Your Money, Money Rules and Saving for School. You can also follow her on twitter @GailVazOxlade.

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