The lowdown on renting goods
Many stores allow you to rent or lease computers, electrical
appliances or other household goods if you don't have the cash to
pay for it upfront. The problem is, these rental payments may seem
low, but they can really add up over time. You could end up paying
up to 5 times more than the retail price of the goods by the time
your lease ends and never actually own the goods.
Here we show you how consumer leases work, and how to get the
What is a consumer lease?
A consumer lease is a contract that lets you rent an item (like
a laptop, TV or mobile phone) for a period of time, usually between
1 and 4 years. You make regular rental payments (usually
fortnightly) until the term of the lease finishes.
People often think when they are renting a product that they're
buying something by instalments, but you do not automatically own
the item at the end of the lease.
Some rental stores will let you purchase this or a similar
product from them at the end of the lease and some let you gift the
product to a friend or relative. If your lease allows you to own
the product at the end of your lease then, by law, the most the
rental company can charge you is the retail price of the item plus
Don't just rely on the salesperson's explanation of what you are
signing up for, or how much it will cost you. Always check your
lease or rental agreement before you sign it. See our rent to buy page
for information about 'rent to buy' deals.
The real cost of consumer leases
Consumer leases generally have low weekly, fortnightly or
monthly payments, but this amount can quickly add up, making
renting a product a very expensive option.
Before entering into a rental agreement, you should compare the
total cost of the rental with what it would cost to purchase the
same product outright.
Find out the real cost of a consumer lease.
Rent vs buy calculator
Case study: Eliza needs a washing machine
Eliza needed a washing machine and decided to rent
one for 2 years. Her payments were $20 each fortnight. When the
lease ended and the company took the washing machine back, Eliza
used the rent vs buy calculator to work
out that she had spent more than $1,000 to rent it. This was more
than twice what she could have paid to buy one instead.
Is a lease the best option for
Think carefully about whether a lease is the best option for
you. Before deciding to rent a product, consider whether you have
any other options. Here are some other ways you could get the
things you need:
- Save up for it - If you don't need to get the
appliance right away, set aside some money each week or month to
save up for it. Check out our pages on budgeting and saving for great tips on starting a budget and
sticking to it.
- Lay-by - Some shops will let you buy things on
lay-by and pay it off over a period of time. The shop will keep it
until you have paid it off. See our page on different
ways to pay for more information on lay-bys.
- Personal loan - If you don't have time to save
for the item or put it on lay-by, you could apply for a personal loan
to buy it outright. Use our personal loan calculator to
work out how much you could borrow and what your repayments could
- No interest loan - If you are a low income
earner, you might qualify for a no interest loan scheme (NILs) loan
to buy what you need. For more information on how these loans work,
and where to find out more, see our page on no or low
- Centrelink advance - If you receive Centrelink
payments, you could request a lump sum payment to buy the item you
need. You would then repay this lump sum by receiving smaller
Centrelink payments for up to 6 months. For more information on
advance payments, visit the Department of Human Service's
Get a picture of where your money goes and what you can afford
in lease repayments.
Get the best deal on your consumer
If you decide you want to rent a product, here are some ways to
make sure you get the best deal for your needs:
There is usually no cooling-off
period with a consumer lease agreement, so make sure you read
and understand the terms of your lease before you sign it.
- Shop around - Check the deals from other
rental businesses, as they can offer similar items at lower prices.
Compare deals by checking the total cost of the lease over the full
length of the contract, not just the fortnightly payments.
- Get a shorter lease - Ask your rental provider
if you can reduce the term of the lease; you might be surprised how
much you could save.
- Only rent what you need - The salesperson
might offer you other things to go with the product, like a games
console or laptop if you are renting a TV. Remember to focus on the
item you came for, as the additional items will only add to your
fortnightly rental costs and the overall cost of the rental.
Case Study: Ali shops around for a better deal
Ali can lease a fridge from one retail
store for $16 per fortnight for 2 years. This will cost him $832 in
total. By shopping around, Ali realises he can get the
same fridge from another supplier for $21 per fortnight for a year.
This will cost him $546. This means that, by paying an extra
$3 a fortnight and entering into a shorter lease, Ali can save
Tips for managing your rental
Read your lease agreement and statements
The terms and conditions of a consumer lease agreement can be
complicated. Read it carefully to understand if you will be charged
account-keeping fees and penalties if you miss payments, break the
agreement or pay it off early. Under the National Credit Act, the
rental provider must provide the total amount payable as rent in
the consumer lease agreement.
Your lease provider must give you a statement every 12 months
showing what payments you have made. You can ask to receive a
statement more often (say quarterly).
Warning about business purpose declarations
Only sign a business purpose declaration if you are using the
leased item for business and can claim your lease payments as a
valid business expense for tax purposes. By signing a business
purpose declaration, you may lose valuable rights under the National Credit Act.
If things go wrong with your lease
If an item is damaged, stolen or destroyed, you will still be
required to pay your weekly, fortnightly or monthly payment as set
out in your agreement.
If you break a lease, you may still have to pay an amount equal
to the rental payments for the full term of the lease. Make sure
you check all the terms and conditions of the lease.
Paying extra in case things go wrong
Some rental companies may offer to cover the item you are
renting against any damage or loss for an additional fee. Before
you agree to this, make sure you understand what the coverage
includes, what it costs, and whether you actually need it.
Stay out of debt
If you have trouble making rental payments, contact your lease
provider straight away to discuss your options. You can also get
help from a free financial counsellor.
What happens when your rental
Ninety days before the end of your lease, your lease provider
must give you a statement showing:
- The date your lease is due to end
- When, where and how you are to return the item you are
- What amount (fee or penalty) you have to pay if you do not
return the item by the due date
- If the lease provider is prepared to sell you the item, and if
so, an estimate of how much it will cost you, plus contact details
of who to speak to about buying the item you are leasing
Decide which option suits you best and contact the rental
business to discuss what will happen at the end of the lease. Once
the rental period ends and you return the product, no further lease
payments should be taken out of your account.
Think carefully before signing up for a lease agreement - it can
turn out to be far more expensive than buying something
Last updated: 16 Oct 2018