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Guide to Understanding Renting

Renting is an agreement where a payment is made for the temporary use of a good or property owned by another person or company. The owner of the property may be referred to as the lessor and the party paying to use the property as the lessee or renter. There is typically an implied, explicit, or written rental agreement or contract involved to specify the terms of the rental. Examples include:

  • Renting real estate for the purpose of Housing tenure (where the lessee rents a residence to live in), parking a vehicle(s), storage, business, agricultural, institutional, or government use, or other reasons. When renting real estate, the person(s) or party who lives in or occupies the real estate is often called a tenant, paying rent to the owner of the property, often called a landlord. The real estate rented may be all or part of almost any real estate, such as an apartment, house, building, business office(s) or suite, land, farm, or merely an inside or outside space to park a vehicle, or store things. The rental agreement for real estate is often called a lease.

  • The renting of motion pictures on VHS or DVD, of audio CDs,
    of computer programs on CD-ROM.

  • Renting transport equipment, such as an automobile, boat, or a bicycle.

  • Renting somewhat specialized tools, such as a chainsaw, laptop
    or something more substantial, such as a forklift.

  • Renting a beach chair and umbrella.

In various degrees, renting can involve buying services for various amounts of time, such as staying in a hotel, using a computer in an Internet cafe, or riding in a taxicab (some forms of English use the term "hiring" for this activity).

Reasons For Renting

Rather than buying, include:

  • In many locales (including Spain, Australia, and the United States) rent used in a trade or business is tax deductible. Rent on a dwelling is not tax deductible.

  • Financial inadequacy, such as renting a house when one is unable to buy it. One may not wish to pay the full price that ownership would need, allows for smaller payments over a specified period of time.

  • A product is needed only temporarily, as in the case of a special tool or a truck.

  • Need for a certain product may or may not be already owned but not in proximity for use, such as renting an automobile or bicycle when away on a trip

  • Needing a cheaper alternative to buying, such as renting a movie: a person is unwilling to pay the full price for a movie, so they rent it for a lesser price, but give up the chance to view it again later

  • The renter may want to leave the burden of upkeep of the property to the owner or his agents. Such upkeep may include mowing the lawn, shoveling snow, and other maintenance

  • There is no need to worry about lifespan and maintenance.

Some merchants have rent-to-own (also called lease-purchase) programs, usually for expensive items such as houses or appliances.

As seen from the examples, some rented goods are used on the spot, but usually they are taken along; to help guarantee that they are brought back, one or more of the following applies:

  • one shows an identity document

  • one signs a contract; any damage already present when renting may be
    noted down to avoid that the renter is blamed for it when the good is returned

  • one pays a deposit (also used for paying for small damage)

Sometimes the risk that the good is kept is reduced by it being a special model or having signs on it than can not easily be removed, making it obvious that it is owned by the rental company; this is especially effective for goods used in public places, but even when used at home it may help due to social control.

Persons and businesses that regularly rent goods from a particular company generally have an account with that company, which reduces the administrative procedure (transaction costs) on each occasion.

Signing out books from a library could be considered renting when there is a fee per book. However the term lending is more common.


 
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