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Monday 13 July 2015

15-181MR New 'Rent vs Buy' calculator for consumers on ASIC's MoneySmart website

Consumers are now able to easily compare the cost between renting and buying household goods, such as electrical appliances and furniture, by using ASIC's MoneySmart new 'Rent vs buy' calculator.

 ASIC Deputy Chairman Peter Kell said the new calculator developed in partnership with the Department of Human Services (DHS) will enable people who are considering a consumer lease to make an informed decision.

‘As part of ASIC's ongoing work to enhance Australia's financial literacy, this tool will assist people in understanding the real costs of consumer leases and compare them to other options,’ Mr Kell said.

‘Consumer leases may seem like an attractive option as the upfront costs are low, however, the ongoing payments can quickly add up.

‘ASIC continues to monitor firms offering credit to low income consumers to ensure they comply with responsible lending obligations. We have and will take action where we see vulnerable consumers at risk of inappropriate lending.’

A consumer lease is an agreement where an individual hires household goods, such as electrical appliances and furniture. The consumer receives the item straight away and makes regular payments until the term of the agreement finishes.

Under a consumer lease, a consumer does not have the right or obligation to purchase the goods at the end of the lease agreement, despite having often paid much more than the original purchase price of the goods.

‘It is not uncommon for consumers to pay three or four times more than the purchase price of the leased goods. In some cases it can be up to six times,’ Mr Kell said.

‘When entering into a lease, consumers need to consider the total cost, not just the monthly or fortnightly payments.

‘We encourage people to compare leases with other options such as buying the item outright, using another form of credit or interest-free deal, or seeing if they’re eligible for a no-interest loan.

‘Always carefully read the terms and conditions of any financial agreement and understand what you're getting yourself into before signing the dotted line.’


ASIC’s MoneySmart website is dedicated to providing free and impartial information and guidance to all Australians on aspects of personal finance. There is also a wide range of useful tools and calculators for all kinds of money issues. Visit

ASIC leads and coordinates the National Financial Literacy Strategy, which provides a broad framework for organisations working to promote financial literacy.

Financial literacy is a key component of ASIC’s strategic priority to promote investor and financial consumer trust and confidence. It is a combination of financial knowledge, skills, attitudes and behaviours necessary to make sound financial decisions, based on personal circumstances, to improve financial wellbeing.

A key focus of the National Strategy is to develop resources for vulnerable consumers and the intermediaries who work with them, to help them make informed and confident financial decisions.

ASIC has been working collaboratively with DHS to help people who use DHS frontline services make better informed financial decisions with the help of ASIC’s MoneySmart online tools and resources.

Additional information on leases

Depending on the terms of the lease agreement, at the end of the agreement the consumer may:

  • return the item (in good order) with no further payments needed
  • make an offer to purchase the goods, which may involve paying an additional amount of money (but the lease provider can refuse to sell)
  • upgrade to a new model after returning the old, and sign up for a new leasing agreement (which may be at a higher rate than before).


Sam is looking to rent a fridge with a retail value of $2,499 for $20.99 per week over 48 months.

Using ASIC’s MoneySmart Rent vs Buy calculator, Sam discovered that the total cost to rent the fridge is $4,365.92 — an extra $1,866.92 over buying it outright. She wouldn't own the fridge after paying this amount.

Sam then explored the option of borrowing the money from her parents who won't charge interest. Again using ASIC's Rent vs Buy calculator, Sam discovered she is able to pay the fridge off in its entirety in 28 months if she paid $20.99 a week.

To weigh up her options further, Sam explored the possibility of taking out a personal loan with an interest rate of 15% per annum with repayments of $20.99 a week. The fridge would be paid off in 34 months and be $1,300.05 less than renting (not factoring in establishment and ongoing loan service fees). She will also own the fridge after the loan term.

Last updated: 13/07/2015 12:00