A consumer lease is when you enter into a contract to lease an item over time. Consumer leases are governed by the National Consumer Credit Protection Act 2009 (Cth). Common items subject to a consumer leases are cars, laptops and mobile phones. People choose to enter into a consumer lease so that they don’t have to pay for an item outright.
How Does a Consumer Lease Work?
Like any other lease, a rental store will rent the item to you on a weekly, fortnightly or monthly basis. This means you don’t have to pay a lump sum at the beginning. You might be looking for a consumer lease if you don’t want to own a product in the long term.
Things To Keep in Mind
1 Cost
Firstly, it’s important to note that in the long term, the amount you end up paying under the lease might be more than purchasing the item outright. This is a common tactic rental stores will use to make a profit. Make sure you think carefully about whether it’s worth renting the item, or just buying it outright.
2 Ownership
Sometimes people confuse consumer leases with paying for something in instalments. However, a consumer lease doesn’t automatically mean that you own the product at the end of the lease term. This is an important thing to keep in mind when you’re entering into the contract. Under a consumer lease, the most you can be charged to buy the product is the retail price plus 48%. In contrast, ‘Rent to Buy’ deals are situations where you enter into a lease deal with the intention of purchase at the end of the lease term.
Example
Joanne has a contract with a car rental company to rent a car for $200 a month for 3 years. At the end of the 3 years, she has paid $7200 for the car. However, she doesn’t own the car. She is now offered the option of paying $1000 to own the car. In total, to own the car she has paid $8200. The original price of purchasing the car outright was $5000.
3 Check your Contract Carefully
Your contract should outline how much money you owe, the term and other crucial information. If you need assistance with a contract, feel free to contact a contract lawyer from our lawyer marketplace.
4 Know You’re Rights
Make sure you know your rights if the product breaks or stops working while you’re renting it. This will usually be in the contract you sign, but if not, you should clarify with the rental company.
5 You Might be Locked In
It’s important to keep in mind that your contract will probably lock you in for a set period of time. That means that if you can’t pay or want to move, it will be hard to cancel or you might have to pay a fee. Make sure you know your rights before you into into a consumer lease.
Summary
Before entering into a consumer lease, make sure you understand the ins and outs of what it entails. If you’re ever in doubt, you can always get legal advice before entering into a contract.
