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Study: Consumers more reckless with rental decisions

When dollar amounts are the same, we're more likely to say yes to renting -- and less likely to compare options or gather information.

By Credit.com Aug 14, 2014 1:47PM
A house for rent sign © Paul J. Richards/AFP/Getty ImagesBy Christine DiGangi, Credit.com
Credit.com

Consumers exhibit more reckless behavior when deciding to rent something rather than buy it, a new study out of the University of Maryland finds. The lack of commitment required when deciding to rent a product leads people to consider fewer options, gather less information and settle for a less appealing product than they would when buying, according to a release about the study.


Anastasiya Pocheptsova, the study's author and a professor at Maryland's Smith School of Business, worked with researchers from Columbia and Yale universities to conduct studies of people's behaviors while considering renting and buying the same products. Shoppers more often chose to buy when they had the choice of buying or renting, but when an item was presented only with an option to buy or only with an option to rent, more people chose to get the product when it was framed as a rental. The price of renting and buying was the same.


"Completing a purchase can come with a sense of irreversibility that distresses shoppers concerned about the long-term consequences," Pocheptsova said in the news release. "Some shoppers anticipate buyer's remorse or worry about forgoing better options that might appear later."

 

It seems approaching a purchase as a rental agreement strips away those concerns, increasing a shopper's willingness to spend the money. 

 

In the study, subjects were presented with advertisements of digital movie downloads and small appliances. Shoppers were more likely to get the products if renting was the only option, and those buyers displayed an interesting pattern: They acquired more things, collected less information during the decision-making process and took less time considering their choices before completing the transaction than shoppers with buy-only options.


"Consumers should be mindful of their different modes of thinking," Pocheptsova said. "Standards of diligence vary, but a dollar is a dollar regardless of whether you spend it for renting or for buying."

 

Not being committed has a price

Even if you don't rent consumer products like movies, appliances or furniture, the study offers a noteworthy lesson. Consider renting a home: Buying a house requires asking a lot of questions, preparing your finances and doing extensive research, but it's smart to approach renting in a similar manner. You could waste a lot of money if you don't think about the long-term affordability of renting your place. You may think, "I can find another apartment if this doesn't work out," but moving frequently is expensive, too.


Failing to think through an item's value before you purchase it is fundamental to living within your means, because even small, unnecessary purchases can add up, potentially putting you in debt. One way to keep your spending in check is to track it -- it won't take you long to figure out where your money goes, and that knowledge will help you make smart decisions going forward.


If you want to avoid or get out of debt, keeping a budget is the place to start. (If you want to see how your spending affects your overall credit, you can get a personalized analysis for free on Credit.com.) 


More from Credit.com

 

10Comments
Aug 15, 2014 9:31AM
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Nothing handles better than a rented car, you can drive over curbs, through fences and even standing water.



Aug 14, 2014 4:50PM
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This survey does not seem to have been focused on becoming tenants and renting a home, but rather renting small appliances and movie downloads (LOL).  BIG difference(!), and bigger leap for turning such results to focus on real estate.  People probably do pay much more closer attention than they do for videos and electric drills when renting a home even if it is true they don't have to deal with lawyers and banks so much as they do when buying.  Sadly, if landlords were regulated more and better as they should be when providing one of life's necessities, the choice would not be as risky --but that would conflict with the American myth and economic subsidies for the promoted and hyped preferred holy grail--home ownership.  Many prefer to rent rather than mortgage, but they should receive equally coddled treatment by their local, state and federal governments as mortgagers.
Aug 14, 2014 5:45PM
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Most people do not take leases seriously. They feel they can break any lease and only be out their security. So why not be reckless!  Move in and build a file of tenant complaints and document it, stop paying rent and countersue the landlord and move on!  The unpaid rent will cover your moving expenses, plus some new furniture.

Aug 14, 2014 4:36PM
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Why get locked into a commitment that will cost you money when you can rent.  Pay rent for 2 or 3 months while destroying the place. Once you've caused sufficient damage, get legal aid to represent your claim that you won't pay until the landlord fixes all the health and safety issues with the premises (that you caused in the first place). After you've bought yourself six months free rent, you can move on and start the process all over again. Why buy this is great!
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