5 things you should never rent

By Liz Pulliam Weston

Renting often gets a bum rap.

Renting a home is certainly preferable to buying if you plan to move within a couple of years. And renting a car occasionally can make more sense than owning one if you live in an urban area with good public transportation.

But at other times, renting is a big financial trap. Seemingly low payments disguise the fact you're shelling out more and getting less than if you'd bought outright.

How to know the difference? Here are five situations where renting is a terrible idea, along with five where it's the right one:

Rims. You can blame it on MTV's "Pimp My Ride" or simply a car culture gone crazy, but flashy chrome wheels are big. They're also expensive, typically costing $1,000 and up for a set. So a bunch of "rent to own" stores hawking rims and tires have sprung up to cater to those with expensive tastes and bad credit.

For example: At Rent A Wheel in Van Nuys, Calif., you can pay the cash price of $1,612 for a set of VCT Grissini wheels, or you can pay $62 a week for a year -- and pay for them exactly twice ($62 times 52 weeks is $3,224). But hey, there's no credit check involved -- or common sense, apparently.

Honestly, if you fall for this scheme, you deserve to stay broke. If you really must have the baddest wheels, you can save up for them in six months (or less, since you're likely to find a better deal if you shop around).

Furniture. Speaking of broke, you'll get there even faster and stay there longer if you decide to "upgrade" to rent-to-own furniture.

At Rent-A-Center in North Hollywood, Calif., you can rent an overstuffed Klaussner couch, love seat and coffee table for $44.99 a week for 83 weeks, which works out to about $2,000 more than the $1,657 the set would cost if you paid cash.

On a recent day on Craigslist's Los Angeles board, there were 1,453 listings selling couches, 2,269 listings for sofas and 542 listings for love seats. Plenty were gently used and selling for $100 or less, sometimes a lot less. If you wanted the same brand, there was a listing for a Klaussner couch for $200.

Another Rent-A-Center, this one back in Van Nuys, had perhaps the saddest offering I've seen: a used bunk bed set for $22.96 a week for 65 weeks, or nearly $1,500, compared with a cash price of $663. Of course, Craigslist is littered with ads for used bunk beds for a fraction of that.

You can even buy a set new for far less. Ikea sells a bunk bed set for just $149. Mattresses start at $69. You could save up for it by putting aside $23 a week and get what you need in a little more than three months.

Computers. If you own a small business, leasing computers can make sense. You preserve precious capital, are able to upgrade more frequently and often get tech support from the leasing company.

When you're a consumer, though, renting is usually a terrible idea, especially if you're renting to own. Because there's usually no credit check, you get the worst possible terms on an overpriced computer. At the Van Nuys Rent-A-Center, a middling Dell computer rents for $39.99 a week for 62 weeks, or a total of $2,479. (The cash price is $1,100.)

Your alternatives? Head back to Craigslist. Check with friends who are upgrading to see whether you can buy their old units. Or check out eMachines, which specializes in low-cost computers. A brand-new desktop with monitor costs as little as $480. You could save $40 a week for 12 weeks and own it outright. (Here are the low-cost favorites of the editors of PC World, all under $750.)

Televisions. You can find a 50-inch Toshiba TV for around $1,200, sometimes less. At the Van Nuys Rent-A-Center, the cash price is $1,800. Or you can pay $34.99 a week for 116 weeks, or more than $4,000, for the beast.

There is no excuse for this, people. Go without, get a $25 set from your local Goodwill or take the 27-inch reject your idiot neighbor puts out on the curb when he gets his rental monster.

Your paycheck. If you fall into the clutches of a payday lender, your paycheck is no longer your own. These places work by lending you cash for a fee. The fee may not seem like much -- $45 to cash a $300 check -- but it works out to annual interest rates of over 400%. (Read "Loans with triple-digit interest" if you need more details.)

If you can't pay back the loan when payday comes around, another fee is added. Fall into this trap, and it's hard -- sometimes impossible -- to climb back out again.

Borderline cases

The five no-rents are pretty black and white. I found two more that have some shades of gray:

Tuxedos. If the only two times you'll ever rent a tux are your prom and your wedding -- and those events are separated by more than a few years -- then renting makes sense. If you're a male urban professional who gets invited to black-tie events, though, you need to buy your own penguin suit. You won't pay that much more to purchase a decent tuxedo than you would to rent one a couple of times, and it will fit you a heck of a lot better.

Handbags. When I first heard of this idea -- renting designer handbags from sites such as Bag Borrow or Steal and From Bags to Riches -- I thought it was the female equivalent of the flashy-rims scheme.

Turns out it's not -- not quite. The point isn't to own (and overpay for) the purses, although these outfits will certainly sell them to you if you want. The point really is to rent a piece of fashion and turn it back in so you can rent another one. You might pay $50 a month to rent a bag that retails for $500, then exchange it in a couple of months for something new(er).

That certainly makes more sense than paying hundreds or thousands of dollars for a handbag and then just tossing it in the closet when the fashion inevitably changes. If you're a fashionista and your finances are otherwise in good shape (on track for retirement, no credit card debt), then maybe I can see it.

I still think most people are better off not trying to ape a lifestyle they can't afford. And don't get me started on Birkin bags. Renting them for $4,800 a month is no less obscene than buying them at $48,000.

Continued: When to rent

READ MORE: RENT - TELEVISION - PAYDAY LENDERS - CONSUMER GUIDE

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