Personal Finance: Don't be stuck with a hi-tech lame duck

RENTING electrical goods, from televisions to washing machines, used to be a popular way to spread the cost of setting up a home. But as prices have fallen, it's cheaper to use a credit card or interest- free loan to buy the goods outright. There is no reason why a television bought 10 years ago will not still be going strong.

But developments in electronics mean that that certainty is under threat. Two new technologies coming onto the market offer extra facilities, but bring an element of risk. After all, no one wants to own the Betamax of the Nineties.

The new gadgets are digital television and DVD, or Digital Versatile Disk. Digital television launched last month on Sky; later this month, OnDigital will launch a system that delivers extra channels without a satellite dish. A third system, digital cable television, will be available in some parts of the country next year.

None of the digital television systems are compatible with each other, and they all need a separate decoder or set-top box to work. In the next few months, electronics manufacturers will launch integrated digitals that do away with the need for a decoder, but they will be expensive.

DVD players are on the market, but prices have only just started to fall. DVD gives a better picture than videotape, and CD-quality sound, but it is a play-only system. It will be some years before recordable DVDs go on sale in the UK.

Rental companies argue that they can solve the dilemma for consumers who want to keep up with the latest technologies but are wary of spending money on equipment that might not prove popular. Granada Home Technology is running a promotion allowing customers who rent a wide-screen television and a set-top box to upgrade to an integrated set in two years at no additional cost. "If the customers don't like it or they want to upgrade, they can come back and change it," explains a spokesman for Granada, Dudley Moor Radford.

Granada's rental prices start at pounds 6 a week for a television and pounds 2 a week for a set-top box. The minimum contract is 12 months.

Independent dealers also offer rental deals on widescreen televisions, digital systems and DVD. Peter Sabatini, sales and marketing director of Lowestoft-based Hughes TV and Audio, believes renting is a low-risk way to sample new technolo-gies. "Electrical goods depreciate very quickly," he says.

After two or three years, renters will have paid out more than the cost of a new appliance. Rental deals only make sense for more complex equipment, where upgrading is usual.

Computers are a good example: many users upgrade their machines every two years. The PC-maker, Gateway, has a rental agreement called Your:)Ware, which offers customers the right to buy after two years.

the knowledge: electrical goods

Make sure rental contracts allow for upgrades and check if there is a minimum period before you can make the switch. Some companies now offer downgrades, such as cancelling satellite television.

Calculate the cost of buying outright and set that against the total rental payments for the time you expect to keep the equipment. Shop around for the best buying prices; some rental examples use list prices and you can get a much better deal in shops.

Check if the deal includes repairs and how quickly they will be carried out.

Check if the company will move the appliance for you if you move house.

Remember that rental does not cover insurance, so check your contents policy before the equipment arrives.