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Standard fact sheet.
Large print fact sheet.

Leasing or renting goods 

Many stores allow you to lease or rent electrical appliances, computers and household goods.

Leasing goods is often marketed as a cheaper option to buying them. However, it can end up being a lot more expensive.

Consumers are often confused about their rights and obligations when leasing goods. Some consumers are surprised to discover that they don’t own the goods at the end of the lease and may not have the right to buy them.

Lease agreements are not usually covered by the stricter regulation of loans and consumers should be aware of their major pitfalls.

Things you need to know about leasing  

It’s expensive

Lease payments may add up to more than what the goods would usually cost to buy. You may also have to pay fees and charges during the lease or before the goods are delivered to you. These fees can include stamp duty, late payment fees and service charges.

You don’t own the goods

Despite paying a large amount of money to lease the goods, much more than the cash price to buy them, you don’t own the goods unless you are able to buy them at the end of the lease.

No cooling-off period, heavy contract terms and high exit fees

There is usually no cooling-off period on lease agreements and no matter what happens, even if the goods are stolen, damaged or destroyed you will still need to make the lease payments. You may also have to buy insurance. Some companies will lock you into a contract and if you want to get out of the contract early you will have to pay all the remaining lease payments anyway.

No warranty

There is no warranty on the goods other than the basic statutory or implied warranties.

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Fair Trading's advice  

Although there are many different types of consumer leases available, Fair Trading does not recommend leasing unless you have done your homework and know what you are getting into.

Don’t be pressured. Shop around. Do your calculations and compare with other options such as paying in cash once you have saved the money or getting a personal loan.

IMPORTANT -  Read all the rental documents very carefully and get independent advice if you don’t understand something before signing the lease agreement.

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When things go wrong  

If you have a problem or dispute with a trader or finance company contact Fair Trading on 13 32 20 to find out your options or go to the Resolving issues page on the Fair Trading website to lodge a complaint.

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An example of a lease agreement  

Kim leases a fridge for $65 per month over 36 months. At the end of the lease period she has paid $2,340 in lease payments (not taking into account the fees and charges that may apply). This is a lot more compared to the retail price of the fridge of $1,000. Kim has paid more than double the original price.

At the end of the lease contract Kim has a few options (depending on the contract):

  • return the fridge (in good condition) and stop making repayments
  • offer to buy the fridge for an agreed amount
  • continue paying the agreed amount and keep using the fridge
  • upgrade to a newer model and renew the contract under new conditions.

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Case study  

David was shopping for a new laptop and the salesperson assured him that a ‘flexible’ renting agreement was the best option. David was told that under the rental agreement he would not pay more than the computer price and would be able to upgrade the laptop without commencing a new agreement and would own the laptop at the end of the agreement. It sounded like a good deal and David signed the papers.

Three weeks after David received the laptop the network card in it failed and David was advised it would take 8 weeks to repair it. The store finally agreed to give David another computer to use while his was being fixed. At the same time David found out that the laptop would cost him $3,600 instead of the retail price of $1,599 and that he would not own the computer at the end of the agreement.

David decided to contact Fair Trading for help. However, there was not much that the Fair Trading customer service officer could do as David had signed the contract and was bound by its terms and conditions.

Fair Trading strongly advises consumers to read the full contract, including the small print before signing anything. In some instances Fair Trading is able to negotiate the cancellation of a leasing contract but it depends on the case.

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