Many budget conscious people cringe at the thought of renting when buying is an option. After all, when you buy something, you own it. It’s yours forever (or at least until you sell it). When you rent something, you have to give it back and the money you spent for the privilege of using it is gone forever.
Even though it may seem counter-intuitive, though, there are times when renting makes perfectly good sense.
- Short term living arrangements. The conventional wisdom about buying or renting a home is that you’ll get all or most of your money back if you buy. Anyone who has lived through the last decade or so knows better than to accept that as gospel. Generally, buying makes financial sense if you’re going to stay in the home long enough to build equity. Otherwise, the additional expenses of maintaining your home can add up to a lot more wasted money than renting would have.
- Equipment you won’t use often. If you need an expensive piece of equipment for a specialized job, either professionally or around the home, consider how often you’re really going to need to use it, how quickly it will deteriorate, and what the cost difference between renting and buying will be.
- When public transportation is available. If you live in an urban area where public transportation is a legitimate option, there’s little reason to own a car. This is especially true in large cities like New York where you may have to buy or rent a parking space. Figure out how often you really need to use a car. Then decide if it would make better sense to use public transportation for daily travels and a rental car for the occasional foray out of town.
- DVDs, Blu-ray, etc. Unless you’re a certified cult follower of a particular movie establishment, you need to ask yourself, “How many times am I really going to watch this?” When you consider that the movie will only cost you a dollar or two to rent after it gets off the new release rack, most movie DVDs just aren’t a good buy. When you rent, you save money while giving yourself a better viewing variety.
As with any financial decision, you should carefully weigh the pros and cons of buying and renting before making your decision, especially if large amounts of money are involved. Just don’t make the mistake of assuming that buying and owning an item automatically makes more sense than renting it. After you’ve looked at the numbers, you may find that renting offers significant savings.