Consumer Leases: Or how to save $3476.92


 

What are consumer leases?

A consumer lease is where a store allows you to rent/lease household goods, without making an upfront payment. You then make regular fortnightly/monthly payments until the term of the lease finishes.

Do you keep the item at the end of your lease?

The short answer is NO! When you are leasing an item you are not purchasing it. Those installments you pay each fortnight are not paying the item off, they just allow you the use of the item. At the end of the lease, the company will usually give you the following options:

  • Keep using the item and continue making payments on it
  • Return it (if in good condition) and make no further payments
  • Offer to purchase it , you may have to pay a cash amount. This however is up to the owner of the item – they do not have to sell it to you!
  • If you return the goods at the end of the lease, you could sign up for a new lease agreement for new goods

Are there any advantages in leasing goods?

The answer is NO!!

Lets look at the costs of leasing a queen-size bedroom suite:

OPTION 1

To lease from a well known national rental company you will pay:

Weekly – $19.99 over 48 months = $4157.92

Don’t forget – you still don’t own it yet !

OPTION 2

Purchase from a well known retailer, put on layby, you will pay:

Weekly – $26.88 over 6 months = $699.00

YES – you will own it!

Things to remember if you lease

  • You don’t automatically own the item
  • You are responsible if the item is damaged or stolen – you may have to continue making payments, sometimes it is a requirement to take out insurance to cover replacement cost
  • Check your agreement, you may have to pay admin fees or if you cancel the agreement, there may be early termination fee.
  • Late payments will attract penalty fees
  • Explore all of your purchasing options, chose carefully as there is no “cooling off period” with a consumer lease.
  • You always have other options.

 Other options:

  • Consider layby – many stores have this facility, you just need to ask. You don’t get to take the goods home until you have paid for them but you pay no fees or interest and YES you own them.
  • Save up and pay cash – some stores will reduce the price for a cash transaction
  • If you are on a low income you may qualify for a NILS – No Interest Loans Scheme – which offers small loans for specific items, that you pay back each fortnight.

Shop around, compare prices & choose wisely