Unfortunately this New Year has already started off with some major expenses for us. It always seems part of Murphy’s Law that things start breaking down all at once. So this got me thinking about how we were going to pay for replacements and the variety of options available out there to help people overcome cash shortages.
In particular I was interested in finding out more about rental schemes available and what the advantages and disadvantages are for consumers when it comes to household goods. By household goods we mean washing machines, freezers, stereos, tables and more.
So is renting household goods ever worth it?
Advantages of renting rather than buying
I was actually surprised at how many of these services are available. The most commonly widespread one which most of you would have heard of is radio-rentals who rent out home entertainment, cameras, kitchen goods, laundry goods, furniture, computer and office products, fitness and more. The main advantage is that if you do not have the cash to buy the product outright you can sign up and rent it for a fee each week.
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This can be both short term and longer term agreements. Many of the companies advertise that for people who have a poor credit history this can be an option for them. After the rental period, you then commonly have an option of “purchasing” the product. There also in many cases are packages especially catering for students who may be leaving home but do not have the money to purchase a house full of furniture.
Disadvantages of renting rather than buying
You don’t have to just read the bad reviews filling the web to understand why this can be a bad option. Basically the end result is that you end up spending a lot more money on a product that you don’t even own. There is also no guarantee that the product is new (although some companies claim they only provide new products). One item that particularly caught my eye was Radio-Rentals Rent, Try, Buy which claims you can rent the product for 36 months and then buy it out for $1.
Buyers beware here-a complaint has been lodged with ASIC because of misleading advertisements of this contract. You do not receive the product you had but one which is “similar”. The important thing is to weigh up the costs over the whole contract period to whether you bought the product yourself.
Make sure if you are going to enter a contract with a company which offers this service that you read the fine print-read the reviews online on how other customers have been stung to make sure you are fully informed. $10 per week for a TV might not seem like much, but by the end of your contract period you may have in fact paid 3 times as much, with nothing to show for it.
Other payment options for you to consider
There is the credit card route but for big purchases this probably is not a good idea if it is going to take you a long time to pay it off. Also consider looking at personal loans available. Make sure you understand how the loan is structured. For instance fixed loans although the interest rate may be lower, mean that in most cases you will not be able to pay back the amount earlier without incurring a penalty.
There are some interest free period deals at some of the major retailers like Harvey Norman which is offering up to 50 months interest free. Make sure you understand the terms and conditions before you sign up. If you have problems with budgeting it is probably better for you to look at the interest free deals with repayments so that at the end you do not have a massive bill to pay. Also weigh up any establishment and administrative costs although these are generally less than any bank fees you would incur on personal loans.
Why you need to be prepared
The reality in life is that things break and need to be replaced. This is especially pertinent in today’s world where goods are no longer manufactured for life time usage. It is important to have enough money stashed away to help you pay for such occasions to make sure you do not have to go into any debt or pay more than you need.
The moral here? Look for ways to save money into a high interest account. Whether you call it an emergency fund, cash stash or rainy day fund – it means you can avoid stuff like this.