The other day I was in an electronics shop where I came across a concept I had genuinely never heard of before. RENTING TVS. A nice 1080p 32" LED Panasonic tv with built in Freeview HD (US guys wont know what I'm talking about but it's basically free cable channels) would rent for $28* a month for a 6 month contract. The price of this tv new was $640. At the end of the 6 month contract, you return the tv and can take out a brand new 6 month contract with the a brand new tv.
$28 a month for 6 months = $168. Assuming I could buy the TV and then resell it for say 60% of it's original value (640 * 0.6 = $384) it would cost me roughly $260 to own it for 6 months. Thats nearly $100 in savings and I get free same-day repairs and installation through the rental contract.
This got me thinking. I had never really considered renting my electronics before (the same place also did iPads starting at $32 a month) but why hadn't I? It seems like the ideal way to get the latest stuff for a cheap price. Why not expand this concept to everything?
If you live in a city such as New York or London, there is no point having a car. For the rare occasion where you want to drive, you can rent a nice one for a tiny percentage of the cost of actually owning it and dont have to worrying about servicing, road tax, resale value, depreciation etc. I genuinely cannot see the advantage of EVER owning a car if you live and / or work in a city.
Thats covered electronics and cars. The big one is a house. You could argue that renting a house will give you more freedom and while you are young I agree, you should definitely rent. However, houses are (usually) an appreciating asset and mortgage costs aren't that different to rental costs so I would say that houses are something you should NOT rent.
Now, this idea of renting everything can be dangerous as it requires a constant stream of payments each month. That is why it would be imperative to have at least 6 months of expenses saved before splurging on anything else.
I am definitely of the opinion that any expensive item which does NOT appreciate in value is better off renting than buying. Assuming you have enough money stashed to cover the costs if you get laid off, I cannot see the downside. Yes you will never OWN your stuff but who cares? If its something like a tv, computer or car there is always a better, faster, more flashy model available so why spend a large amount of cash to own something which will instantly devalue and be outdated within months?
* All prices used in this blog are in dollars converted from pound sterling at a rate of 1 pound = 1.6 dollars
You have never heard of Rent a Room or Rent a Center? Really?
If it flies, drives, floats, or fucks...
Felix Dennis. Nice.
Words to live by.
OP: I think the reason it appeals to some is the resale value of TVs, etc depreciates faster than its utility. So yeah, if you don't plan on "holding the TV to maturity" (i.e., receiving the utility "coupon" over time until it ceases to function), then renting may make sense. I guess if you're young and transient (in which case part of what you're paying for is convenience); or, you will buy newer/better TVs as they are released (probably more common) then sure. It's the same story with leasing a car.
In the states, these stores tend to be in low rent (
Renting electronics is the future due to mineral resources becoming scarce, or due to their prohibitive prices (due to rare earths and china restricting supply, high copper and gold prices etc..)
You sure about that? I think the US market will be just as likely to buy TVs, and maybe more. If they contain enough (on a value basis) of the "material(s)" which don't depreciate.. the higher the spot price of this "material," the less the TV will depreciate over its lifespan (on a percentage basis; NOT on a dollar basis), the higher the proportionate resell value. This is also "irrational," since the same $ amount is lost to depreciation as if there were no valuable "material" components. That said, from a behavioral standpoint, people tend to compare relative value this way. E.g., plenty of people would travel an extra 30 minutes to save $50 on a coat, while far fewer would travel an extra 30 minutes to save $50 on a car. You're still being paid $50/hr to do it.. but yeah.
The issue is that a consumer is highly likely to throw away the tv at the end of its lifecycle. Also, electronic technology changes fast so i doubt that the value of your tv will track commodity prices. There are many other advantages to offering electronics as a service rather than a good, but i belive that the part about raw materials is quite important for the company.
One good example that illustrates the about the amout of precious metals we throw away on a daily basis is with the european company Umnicore. This big european metals company almost completely closed down its mines and now gathers its materials from scap electronics.
Check http://www.preciousmetals.umicore.com/PMR/
For an individual, renting electronics is silly. especially if you're talking about a phone, TV, audio equipment, etc...
I still have a 46 inch LCD that I bought over 5 years ago to watch films on (I don't watch TV) when i don't feel like using the projector. I'll probably hold on to this TV for another 5 years. If I was renting I would have spent more money and would have been sucked into the meaningless "race" to upgrade to the latest / greatest model.
As for my phones, I'm still on the blackberry curve (one is over 2 years old, one I was given this year). No issues with either. I have no need for the latest iPhone/Android. I will call the same people with either.
The utility and cash savings from owning things that last a long time (several years) and work is far better than renting durables that you will use regularly. Renting is even worse when you constantly "upgrade" to the latest and greatest and incur high interest costs (implied in the rent).
I don't own a car, but if I had to buy one (i.e. changed locations where it was a must) I'd look to use for 8-10 years and not leverage and/or amortise the loan in 2 years, instead of leasing and upgrading every 3 years. The cash savings are massive and no one cares about your car... Fact. Interest costs are a killer. You get not extra utility out of paying interest, you only bring your consumption closer to the present in time, which means you will have to earn more later.
you can rent cars... ZipCar
Do you really want to upgrade to a new TV every 6 months? Is it even worth it? Do you have time to sit at home and just watch TV? For those of us working, the answer is probably no. Get a kick-ass TV this year for, let's just say, $2000. The best of the best. You can just keep this TV for years and years considering that it's already huge and incredible so there's really no reason to upgrade. If you keep it for 5 years, you'll be paying $33.3/month. Perhaps I'm old fashioned but I just don't see having the biggest baddest toy as a priority.
You'll be better off going TV-less for a year or two if you haven't tried it. It's great being un-plugged.
I haven't had television in about a decade. My parents never wanted it and neither do I lol. It's a hell of a lot better this way compared to my friends who spend hours on it. #books>TV
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