Renting

Andy

Andy

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Andy
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Just been to PC World today and was asking some questions about the canon 40d, of course they didn't know more than a 3 year old. They told me about renting it and said its £768 for 3 years with the option to buy it at a cheaper rate, maybe £150.

Well I thought this is mad and what kind of idiots would pay to rent? You can buy it cheaper than the price you would rent it for :thinking: Although it spreads the cost out you can get the same monthly price to pay it off.

Anyone here who rents a camera?
 
Andy said:
Just been to PC World today and was asking some questions about the canon 40d, of course they didn't know more than a 3 year old. They told me about renting it and said its £768 for 3 years with the option to buy it at a cheaper rate, maybe £150.

Well I thought this is mad and what kind of idiots would pay to rent? You can buy it cheaper than the price you would rent it for :thinking: Although it spreads the cost out you can get the same monthly price to pay it off.

Anyone here who rents a camera?
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Don't you mean lease, rather than rent?
 
Nope rent, evens says rent on the paper he printed off for me.
 
Andy said:
Nope rent, evens says rent on the paper he printed off for me.
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Renting tends to be a short-term thing, for say a week or a month. Leasing, on the other hand is more common for the long term. The fact that there is a balloon payment at the end to own the camera suggests it is a lease. I don't ever remember getting the option to buy a rental car, but it's common with leased ones.....

EDIT: Had a look at their site, they do indeed call it renting, but the way they describe it it looks all the world like a lease to me....


There's probably a tax-related reason for calling it renting.
 
It sounds very much like a finance lease, I expect there is an element of interest built in there - hence why total payments are more than the cost of the camera. Bit like a hire purchase scheme with cars.

Probably just termed rent so the punters don't get confused ;-)
 
Lease :) Got confused with them calling it renting then.
 
"Lease" is what you do, "rent" is what you pay. The two terms have ended up confused due to misuse.

Bob
 
Best way to look at those sorts of deals is work out the total payable, divide by the price you'd pay today for cash then take the nth root (n being the number of years the lease is for), take away 1, multiply by 100 and you have the implied interest rate in the lease.

Compare that to what you could get with a normal bank loan and decide if it's worth it for you.

e.g. Total payable £150, cost today £100

so 150/100 = 1.5

lease runs for 3 years so take the cube root... (can't find a symbol for that on my keyboard!)

= 1.145

Take away one and x100 and you get to 14.5%. I know I can get a loan at a better rate than 14.5% so in that example I wouldn't go with it.

The formula above is a little simplified so isn't 100% accurate if you're making monthly payments but is close enough to make a decision on.
 
I would imagine, that it's more to do with being able to write off the cost of leasing kit against your profits or similar.

May also be to do with credit being hard to come by these days, so leasing is another option to shift units to prospective owners who may not get credit (or may not want credit)

You'll probably find that there are benefits to leasing - such as replacements if the kit is stolen or broken and in for repair. You'll probably get a "warranty" for the term of the lease and not the manufacturers term :shrug:
 
OutLore said:
You'll probably find that there are benefits to leasing - such as replacements if the kit is stolen or broken and in for repair. You'll probably get a "warranty" for the term of the lease and not the manufacturers term :shrug:
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I asked about that and they said only for 1 year then you have to pay if its broken etc
 
Its mainly meant for businesses that sorta deal imo, it means you can get the kit you need there and then and use the money youve saved in other areas, sure it costs you more in the long run but it means you dont have to stump up the full cost right away (which is usefull when for example buying in bulk especially with this "credit crunch")
 
Sometimes leasing can make sense, if you are a business that is and you can offset the lease cost against profits. However a conversation with your accountant is best in these cases as it may not be tax efficient. For the individual it probably doesn't make sense, if you need finance as been said earlier there are cheaper ways.
 
Andy said:
I asked about that and they said only for 1 year then you have to pay if its broken etc
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Hmmm, not sure that would stand up in a court though - if they've leased you a piece of kit for 3 years, and it stops working after a year, I would think they are duty bound to replace it or repair it.

It may be that should that happen, you simply turn the old one in and get a new lease on new kit?

Which brings up another good point regarding leasing, it enables you to always have the latest equipment.
 
Definitely aimed at businesses where cash flow is important and up until last year with the introduction of the AIA was more tax efficient as the monthly payments could be offset 100% against tax where as capital purchases had to be depreciated over the life of the product (typically 5 years) - the AIA means that a business can now claim 100% deduction for upto 50K in any 1 tax year so the advantages of leasing have dropped slightly.
 
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