Can’t Seem to Commit? Try Leasing

By September, Deorothea Mash was already unhappy with the black and lavender couch she’d picked out in June.

The colors made her “dizzy,” she said, and clashed with her dining room.

She wanted a change.

Had the 58-year-old nurse’s aide in Bismarck, Mo., bought the couch from a furniture retailer, such a change would have put her out $1,200, the price of the couch. But because she had leased the sofa from a local rent-to-own store for about $40 a month, she was able to replace it at no extra cost with a couch of a different color, iron gray.

“I change my mind a lot,” Mash said. “That’s why leasing is so great for me. If I don’t like something, I just take it right back.”

For capricious consumers, leasing can be an attractive alternative to buying. It allows them to test products before committing to a purchase.

That kind of flexibility is well worth it for some people, according to marketing experts, even though it invariably costs them more in the long run.

“People are realizing that what they really want is the benefit of the product,” said Noel Capon, a marketing professor at Columbia University’s business school. “They don’t want to own, because owning is a real pain in the neck.”

Leasing’s popularity has been growing in the U.S. since Congress passed the 1986 Tax Reform Act, Capon said. The law eliminated many of the tax benefits of buying goods on credit by rendering interest payments on all items except homes nondeductible. As a result, the appeal of leasing household products has grown beyond its traditional low- to middle-income market to include more affluent consumers.

Trade figures say more than a fifth of all leasing in 1994 was done by households with annual incomes of more than $50,000. Today that percentage is probably much higher, said Richard May, director of the Austin, Texas-based Assn. of Progressive Rental Organizations, a trade group for the $4-billion leasing industry,

“The perception of the leasing business is changing, and no longer is leasing just for people in difficult [economic] circumstances,” he said. “The marketing and ads have shifted to the affluent.”

The shift has been a boon to companies such as Atlanta-based Aaron Rents Inc., which targets companies and upscale consumers. Aaron, with 275 stores in 25 states, furnishes apartments for corporate executives who are away from home on assignments for several weeks or more.

Leasing is “a good short-term solution” because it doesn’t tie up a company’s capital in the way purchasing would, said Kristen Jansen, Aaron’s national marketing manager.

Leasing also appeals to consumers who are in “transitional stages” of life, industry observers said. For victims of tragedies ranging from floods to divorce, leasing household items offers a “short-term solution until they get their feet on the ground,” said May.

Regardless of the circumstances, he said, the best leasing arrangements for consumers are usually short-term, rather than renting to own. “If you’re looking for a deal, don’t go rent-to-own,” he said.

For some big-ticket items, such as cars and trucks, leasing is a well-established trend.

To be sure, leasing isn’t always a wise option, and in the long run you’re usually better off buying. Nor is it always available. Most boat dealerships don’t offer leases, because repairs are so costly, and many motorcycle dealerships charge substantial fees for breaking a lease, making a summer joy ride impractical.

The industry is promoting the leasing of seasonal products as an alternative to buying. For example, a consumer needing a 10,000-btu air conditioner for three months could buy one for about $520. Alternatively, Show Me Rent-to-Own in Farmington, Mo., will lease it for three months at $20 a week, for a total cost of $240, including delivery, setup and service.

Today, just about any item found in a house can be leased, from microwave ovens to washing machines to lawn mowers to jewelry. A few men have even leased engagement rings, APRO’s May said, to avoid making a major financial commitment before clinching the marriage commitment.

Amid all the choices, consumers should be careful, however, because it’s sometimes easy to lease too much.

“Leasing is kind of like a candy store,” said Ernie Lewallen, owner of Cincinnati-based United Household Rentals. “When you get full, you have to stop eating or you’ll get sick.”