UNDERSTANDING EASE OF LEASE

EVERY time I get the invoice for my Uber ride to work I wince a little. It is not a lot – about R120 a day – but it adds up. Watching that cost tick away triggered me to think about buying a car but it just never makes sense. According to the AA vehicle rates calculator – a guide to calculating how much it costs to run a car per kilometre and used in expense claims or tax returns – a 1.3-litre Toyota Corolla 2016 costs R6.34 per kilometre to run. This includes purchase price, depreciation, resale, insurance, maintenance and petrol costs. My last Uber ride cost me R8.58 per kilometre.

Using Uber to travel 20km per day, on average, for two years will cost R125268. According to AA rates, that distance will cost R92564 if you buy the same vehicle and sell it afterwards. Renting is more expensive. But it comes with the extra comfort of not needing to drive. Traffic means I can sit back and read a book, reply to e-mails on my phone or prep for the morning meeting. I spend only at the time of use, freeing up my capital to invest or spend on other opportunities.

I carry less risk by not owning a car – in an accident I don’t need to argue with insurance companies and about not getting a fair value when I sell the vehicle.

The feasibility of renting depends on the individual’s situation and is less viable for longer distances or where there is less routine. But it’s an option we often forget to consider or properly calculate. Leaning into the couch working through the comparison, I looked at everything I own. Does it make sense to own anything?

Rent everything

What if we rent everything – the couch, oven, TV, carpet, cutlery and curtains? It sounds like an uncomfortable concept but, looked at another way, I already do – I rent a fully furnished apartment.

I pay a premium on my rent to use the appliances owned by someone else. I pay for damage or theft directly per instance or indirectly through insurance coverage.

If we break up that premium per item, there exists a market and an economic model where everything can be rented instead of bought. When you move you could, theoretically, rent everything on a contractual basis instead of transporting all you own or restocking the place with what you need. Once done with it you return it to its owner – a renting agency – pay for any damage, and move on. A secondary market would develop for used goods and the renting agency would be able to lease these at a lower price.

From a consumer’s point of view, you will have higher flexibility and variety. Your house could be redecorated twice a year. Your consumption could track your income – if you are having a rough few months, send back your TV and deluxe coffee machine until you find your financial footing again.

Economic success based on perpetually increasing production cannot last as we are constrained by resources. But that does not mean we need to decrease individual consumption – we just need to be clever about how we do it.