When Souvik and Lahari Basu shifted to Bangalore, the couple did not buy furniture and appliances. For their rented apartment, they opted for rented furniture and appliances just as they use Uber/Ola to commute daily. Their rationale was that it involved no upfront investment and was convenient. Just as they paid rent for the house, paying rent for other stuff worked well, they said.

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The Basus are part of a growing tribe of millennials who don’t care about owning an asset. So, cars, books, clothes, furniture, appliances and everything else is rented. These consumers prefer a hassle-free lifestyle, because owning an asset is not only a frightful expense, but its maintenance eats into any economic value that is left. How does renting versus owning really work out as far as personal finance is concerned? DNA Money talked to experts to find some answers.

Renting furniture
Online platforms like Furlenco, Rentickle, Pepperfry, Fabrento, Cityfurnish and many more allow you to have a full drawing room, bedroom and much more on hire. The flexibility of on-demand furniture, without a security deposit, pocket-friendly rents, shipping in 72 hours and the ability to change the furniture every three months are among the factors cited by users to opt for rented furniture.

But does it make economic sense to rent when you can own? “The cost of doing up a home costs anywhere between Rs 1.25 - 1.5 lakh with regard to furniture and soft furnishings,” said Ajith Mohan Karimpana, founder and CEO, Furlenco. While renting this costs anywhere between Rs 4,000 (basic) to Rs 6,000 (premium), he claimed.

For professionals who move cities every few years as part of their jobs, the cost of relocating and repairing damaged furniture/appliances can be huge. “Hence, for a two year window, it makes sense to rent furniture as against buying it,” added Karimpana.

Choose and upgrade as per your life needs
You can rent the furniture based on your needs, at any point of time. For instance, if you are a bachelor, you can choose studio solutions + basic appliances. Once you want to upgrade if your life needs change (you get married), you can upgrade to a queen/king bed and add on more accessories. Once you have kids, you can upgrade to a kids’ subscriptions program.

With hired furniture and appliances, many platforms offer free relocation services and damage waivers. Typically, a basic bedroom and living room package starts at Rs 999/month and the premium variation of the package goes up to Rs 2,500/month.

Renting vehicles for personal use
Purchasing a car is a costly investment. The same is true for bikes/scooters if you are at a low-income level. The liability of a loan for buying your own car or bike is, at the end of the day, a burden. This is why many platforms like Avis, Zoomcar, Kayak, Revv, Drivezy, Vroomdrive, MyChoize, etc, encourage the self-drive rental option.

A mid-level car costs Rs 5-6 lakh on-road. Plus, there are charges for annual repair, maintenance, parking, insurance and so on. By renting, some of these expenses can be consolidated.

Sunil Gupta, MD and CEO, Avis India said: “A new car can depreciate by as much as 25-30% in the first year and by 15-20% in the subsequent year, thereby not holding much value as an asset after a few years.” Once you take out the driver salary of Rs 12,000-20,000 per month, renting is not a bad proposition. The monthly installment for a Rs 5 lakh car loan, for three years, can be about Rs 16,100. Rents can come cheaper. At Zoomcar, somebody in Hyderabad’s Banjara Hills can pick up a sedan at 9 am and leave it at 7 pm, after travelling 50 km the same day, for Rs 700 only. So, if you do that for 20 days a month, you pay Rs 14,000.

“Private cars are idle most of the time and, hence, buying a car becomes more of a liability than an asset. Renting a self-drive car includes none of the regular additional expenses that come with an owned car, making it a more favourable option for the user,” said Gupta.

Additionally, buying a car can lead to large down payments and Equated Monthly Installments, which can continue for several years, whereas, renting can give you the variety to choose a car for every occasion.

Similarly, scooters and bikes can be rented for small amounts. For instance, platforms like Rentrip allow you to pay daily rent of Rs 350-1,800. You can get deals for Rs 6,500 a month to Rs 20,000-40,000 a month.

Cost-benefit analysis
Personal finance experts believe that users must look at a few factors before deciding between buying and renting. Firstly, see whether the cost of rent equals the purchase price. “When you look at the purchase price of any good, be it a car, fridge or furnishing the whole room, account for interest rates if you are taking a loan. For shorter periods like one to two years, there is no sense in buying something. Also, include maintenance costs. Motor insurance for cars and bikes can help you escape some maintenance and repair cost, but taking an insurance cover is a cost too,” pointed out Ravi Sharma, a certified financial advisor.

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Secondly, renting also involve costs, such as charge for home delivery of the rented good. If you damage the good, the damage is above a certain limit, you may be have to pay the differential. There could also be penalties/fines for the late return of a rented product.

Source: DNA Money