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Rent or Buy

March 20, 2016

It seems to me that people are losing the distinction between renting and buying something.  More properly, companies are encouraging people to lose that distinction.  Their customers are likely smarter than that, however.

The distinction has to do with ownership, not with payments.  If you buy something, you own it immediately.  As the owner, you can do anything you want with it.  You can sell it or otherwise dispose of it whenever you want.  If you are prevented from doing those things, it’s because you don’t actually own it.

I just received an e-mail message from a major telecom company that offered me a new mobile phone for zero dollars if I took out a monthly plan with them.  That’s how most people get mobile phones these days.  What does a phone really cost?  I suspect that most people don’t know.  It’s in the range of $400 to $1200.  You’re not really getting it free.  You are paying for it with your monthly plan, along with whatever air time and data that’s included.  You also don’t own it.  It belongs to the telecom company.  Read your payment plan to find out the terms of this agreement.  There is an alternative, though, one that most people don’t consider.  You can purchase a mobile phone outright, and put it on a plan with a telecom company.  In this case, you pay only for air time and data.

With domain names, there’s no such alternative.  The companies that provide domain names all rent them.  They say that they’ve sold it to you, and that you are the owner, but it’s only yours for a fixed number of years.  You can renew it for a further term, but it’s never really yours.  If you don’t renew it, the domain name reverts to the company.  They will sell it to somebody else.

Software is often offered on similar terms.  You pay for it once, but ownership remains with the vendor.  You are never the owner.  The vendor places restrictions on what you can do with it.  That sounds like renting to me, although the company would call it a license.  If you violate the terms of the license, you might be hearing from the company’s lawyer.  You also have no alternative, other than not to agree to the license in the first place.  Not all software is offered this way, but it’s certainly the usual way.

It’s clearer with automobiles.  If you borrow money to purchase a car, the finance company uses the car as collateral for the loan.  You are the owner, but you owe money to the finance company.  They will have a say if you want to sell the car, but that will be covered by your loan agreement.  You can also lease a car, just like you might sign a lease for an appartment or house.  In this case, you are not the owner.  It’s a lease, not a purchase.

You have a similar choice to buy or rent a house, condo, or appartment.  If you take out a mortgage, it’s just like a car loan.  You are the owner.  If you sign a lease, you are renting your living quarters.  The company offering the lease is still the owner.  You will be making monthly payments in either case.  You always have to decide which choice is best for you.

Ownership is the key.  If you are paying for something, regardless of whether it’s one time,  monthly, or annual, but you don’t have ownership, you have not bought that thing.  Instead, you are renting it.  Maybe that’s perfectly okay.  Maybe it’s exactly what you wanted.  The main thing is that it’s clear to you.



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