Renting appliances

Is renting things for your home a good idea?
family-budget-arm-downIt can be expensive to buy a new appliance like a fridge or a washing machine, so it might seem like a good idea to rent one instead. The problem is, when you rent, even though you only pay a little bit every week or fortnight, the costs can really add up over time.

Here we show you how to make sure you don't get ripped off when renting things for your home.

Video: Renting things for your home

Animated video about renting things for your home

Aunty B explains how costly it can be to rent things for your home and shows you how to get the best deal for you and your family. 

This video is part of a series of animations created for the Take a minute with your money campaign

Transcript: Renting things for your home

How does renting work?

You can rent things for your home, like a TV or washing machine, by signing a document called a 'consumer lease'. Under this agreement, you will usually need to make small payments every week or fortnight until the agreement finishes. You might have to keep making these regular payments for a long time - sometimes up to 4 years.

Consumer leases are sometimes advertised as 'rent to own' or 'rent to buy' products. However, because you are renting the item, you don't own it at the end of the lease. Some rental companies might let you offer to buy the items for a small additional cost. However, by this time you might have already paid more than three times the cash price of the item.

Renting can be expensive

washing-machineRenting appliances can cost you a lot more than you might think. By making small payments for a long time, renting an item can end up being the most expensive way of getting the things you want.

The payments you make under a consumer lease might seem small compared to the cost of buying the item, but when you add up the total cost of renting, it is much cheaper to buy it instead.

Use our rent vs buy calculator to find the real cost of renting things for your home.

Rent vs buy calculator

Case study: Leanne rents a dryer

When Leanne's washing machine broke down, she didn't have $450 buy a new one, so she decided to rent one instead. She signed a consumer lease agreement where she had to pay $20 every fortnight for 2 years. When the lease ended, Leanne used MoneySmart's 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.

Alternatives to renting

If you need a fridge, washing machine or bed and don't have the money to afford it right now, renting is not the only way to get it.

Here are some other ways to get the things you need:

  • Save up for it - If you don't need to get the item straight away, set aside some money each week or month to save up for it. Check out our pages on budgeting and saving for tips on starting a budget and sticking to it.
  • Put it on 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 laybys.
  • Apply for a NILS loan - If you are a low income earner, you might qualify for a no interest loan scheme (NILS) loan to buy what you need. This type of loan means you only pay back exactly what the item costs.

Only rent what you came for

Smart tip

Shop around before you rent. You might find the same item for a lower price somewhere else. Compare the total cost over the rental agreement, not just the fortnightly payments.

If you decide to rent something, you might find that the salesperson offers you other things to go with the item you want. For example, if you are renting a TV, they might offer to throw in a DVD player or a games console for a little bit extra. This is called upselling.

Do you really need the added extras?

Focus on the item you came for. Any additional items will only mean you end up paying more. You don't have to get any extra items just because the salesperson offers them to you.

Read your rental agreement

Bookup-terms-and-conditionsYou will have to sign a consumer lease agreement when you rent an item. This will tell you the rules you need to follow while you are renting the item. These rules are called 'terms and conditions'. The terms and conditions of this document can be complicated, so read it carefully to make sure you understand it before you sign. Ask questions if you are not sure.

Find out what the fees are, and whether there will be any extra fees if you miss repayments, cancel the agreement or pay it off early.

If you cancel a lease, you may still have to make the rental payments for the full term of the lease. Check all the terms and conditions of the lease.

Case study: Martin wants to end his consumer lease agreement

Martin signed up for 2 years to rent a TV for $25 per fortnight. Six months later, when Martin's girlfriend moved in with him, she brought her own TV. They didn't need both TVs, so Martin called the rental company to stop his lease. They told him he still had 18 months left on the lease and he would have to pay $926 to cancel his agreement. This is the amount written in the 'early termination' section in the lease agreement. Martin was annoyed, so kept the TV and had to pay for it even though he didn't need it.

Check your rental statement

The company you rent the items from must give you a statement every 12 months showing what payments you have made. If you want to receive this statement more often to keep better track of it (say, every 3 months or 6 months), you can ask them for this.

What happens when your lease ends?

At least 90 days before the end of your lease, the company must give you a statement showing:

  • When your lease is due to end.
  • When, where and how to return the item you are renting.
  • How much you will have to pay in fees or penalties if you do not return the item by the due date.
  • Whether they will let you buy the item you have been renting, how much it will cost, and who you need to contact to buy it if you want to.

Don't leave it to the last minute to decide what you will do when the lease ends.

Check your bank account carefully when your rental agreement ends. If you have returned the things you rented, you should not be charged any more rental payments. If you have been charged, contact the company straight away.

Renting appliances can be an expensive way to get what you want. Before you sign a consumer lease, make sure it's right for you.

Related links 

Last updated: 06 Oct 2016