Tech – Rent or Buy?

Technology is expensive. With newer, shinier gadgets being released every couple of months it’s difficult to keep up with the blistering pace of advancements, especially when every upgrade is taking a chunk out of your wallet. There is much to be said for renting when it comes to electronics and appliances.

In days gone by it was unheard of to own a television or a fridge, big appliances were rented as they were largely unaffordable and credit was not as readily available as it is today. As the prices of electronics have dropped, people have taken to purchasing TV’s, fridges, dishwashers, washing machines and other appliances through hire purchase agreements.

The downside of ownership has been a deterioration in credit records. If you run into financial difficulties and can no longer meet your monthly repayments, you are locked into a payment plan which can result in repossession and a bad credit record.

A rent-to-own model is essentially similar to a hire purchase agreement – you effectively pay off the appliance and at the end of the period you are able to take ownership. The major difference, however, is that it is not a credit agreement. That means that you can exit the contract at any time with an agreed upon notice period without making any further payments and without it affecting your credit record.

The other main benefit is the service that you receive. If your appliance stops working the rental company will come and repair it. If the item has to be removed for repair, a loan appliance is provided and if it cannot be repaired a replacement is sent.

The rent-to-own model also makes a lot of sense for small businesses. Business owners take on debt in order to purchase items like fridges and TVs, which are depreciating assets and liable for repairs and maintenance. If you rent you do not have depreciation or repairs to worry about and the rental payments are fully tax deductible.

A large percentage of electronic rental agreements are entered into by people who just want to keep up with the evolving technology and therefore want the flexibility to upgrade their rental contract to the latest gadget.

A caveat of rent-to-own is that rental instalments can increase per annum and there may be administration fees bundled in the agreement. The upside is that you can always give the appliance back if it becomes unaffordable.

Renting always comes out being more expensive than purchasing outright, but the flexibility of the plans, additional features and included services make for an enticing solution. We live in a time of uncertainty, with a weakening economy and higher interest rates, so going back to a rent-to-own strategy is perhaps something we should at least be considering.

Source: mayaonmoney

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