Renting Over Buying

Renting Over Buying

Renting is a financial transaction wherein those who are interested in using a product will pay the owner of the said product in exchange for the right in using it for a period of time. The owner will still retain the rights over the product but will have to surrender the product to those who wanted to rent the product.

This is also referred to as leasing wherein the transaction is between the lessor (the owner of the product or property) and the lessee (the person renting the product). After the agreed time of use, the lessee will have an option of extending the rent through the agreed compensation. If the lessee is no longer interested in the product or property or no longer have the means to extend the rent, the lessee should give up the property.

Why Renting is a Bad Idea

Renting should never be anyone's constant financial practice to obtain the right to use anything. When a person rents, he or she only has the right to use the specific property or product but will never be able to own the product even after years or lifetime of use. The lessor will always have the right over the property. Depending on the agreement, the lessor might even invoke the right to use the property and seize it.

The worst type of renting is when you do it in real estate. Anyone should grab the opportunity of purchasing the property as long as they are allowed to do so. The amount that you will pay in mortgage monthly is almost the same than the amount that you pay for rent monthly.

When you buy the real estate, you pay the mortgage monthly but the payment will stop and you become the owner of the property. Renting the property will only make you spend a lot on property without even having a chance of owning it.

When to Rent

But that doesn't mean that you have to buy anything that you want to use. There are circumstances wherein it is smarter to rent something rather than buying. For example, if you have bought every movie that you have rented to watch, you could be spending hundreds of dollars more every month and you might not even watch the movie again.

Rent could become a viable option when the product is perceived to be used only once and too expensive to be bought. Aside from movies, there are power tools that you can rent since they are rarely used and could be very expensive. You might even have some trouble in keeping tabs of all the things that you have bought.

Options for Buying

One of the main reasons why people opted to rent instead of buying products is the amount of commitment they would give to the bought product. This is especially true in real estate. When a person rents, he or she could sever the relationship in just a few months or even immediately if there is an agreement with the lessor.

On the other hand, purchasing a home will require the new homeowner to pay the monthly mortgage continuously for years depending on their agreed payment period.

But that should not be an excuse for anyone. Instead of losing a lot of money in rent, they should carefully select their future home so that they would not end up in frustration. Every month that they hold on buying a home and continue to rent, they are spending their money on something they could never use in the future. Although there are a few situations wherein renting is a good thing, renting is a lost investment and should be avoided in most situations.