This is a guest post from Jennifer Gregory.
The first thing that popped into my mind when I received the invitation for a New Year’s Eve party was that I needed a new dress. I spent several days scouring the stores for the perfect dress and blew my clothing budget on the perfect black dress, new shoes, and a handbag.
But when I went to the party, a friend told me that she had rented her fabulous looking dress at a local boutique. Really? I wondered if that might have saved me money, especially since I most likely will not wear the dress again.
After checking my options online, I was surprised to learn that short-term leasing has become an overall trend for many helpful items. For example, people who don’t need a car every day can participate in car shares through ZipCar. The same goes for bike sharing in certain locales.
And with Avis’s recent purchase of ZipCar, such services will most likely become more main stream and expand into additional markets.
Instead of purchasing the beaded handbag that I took to the party, I could have rented a totally fabulous one for the evening for less than I paid for the purse that will sit in my closet.
So why is this a trend?
While you have always been able to rent a TV or a car, there has definitely been an increase in popularity and the acceptability of it — as well as in the number of options for doing so. I suspect that the popularity of such things has been driven by the shaky economy.
Saving money became “cool” during the recession, which has lifted some of the stigma from renting. Technology has also made it possible for us to share cars and rent dresses with an ease that was not previously possible.
Is renting a smart financial move?
The answer is, it depends. Before making the decision to rent an item, you should determine the cost-per-use of the item. Add up all costs included with purchasing an item, including tax and recurring costs, such as gas, insurance, and maintenance for a car.
From there, estimate out how many times you will need to use the item and divide that number into the cost of owning the item to get the cost-per-use. If you only really only need a car once a month, then your cost-per-use will be quite high.
On the other end of spectrum, if you splurge on an expensive purse but carry it every day for the next five years, then your cost-per-use will most likely end up being pennies.
Next, determine all of the costs associated with renting the item, including any insurance or shipping fees. Compare the cost-per-use of owning the item to the rental cost to determine if it is a smart financial move.
You should also consider the convenience factor — how long does it take to get to the rental location, to have the item cleaned, etc. The old adage of time being money still holds true.
Getting the most out of short-term rentals
Not all rental companies and contracts are the same. Cost, terms, and liability can all vary greatly. Here are some tips for short term renting of clothing, cars and anything else that is on the rental market:
- Read the fine print. Then read it again. Be very clear on the terms and conditions of renting.
- Calculate the costs. Include all aspects of renting, including possible shipping fees.
- Verify timely delivery. If you are ordering online for a specific event, make sure that the item will arrive in time.
- Know the return rules. Make sure you understand all policies, deadlines, and late fees. If returning an item by mail, clarify if the item needs to be received by the deadline or just postmarked by that date.
- Know the deposit policy. To get your deposit back, does the item need to be cleaned before returning? What is the process for any damages?
- Consider purchasing insurance. Some companies offer insurance against damages. Look into the details and weight the costs against the likelihood of needing and costs associated with repair or replacement.
Short-term rentals can save you money and, in many cases, time. By taking the time to determine if it makes financial sense for each situation, you will save money while still looking fabulous and/or getting where you need to go.