The first thing to remember is that instruments are not cheap, and will likely never be cheap. This means that the huge financial purchase you make to buy the instrument should be justifiable in the amount of use that it will get. If your child is just a casual player and is not interested in the long term, then renting may be a much better option since in the long term it is much cheaper. Remember that once you purchase an instrument it immediately begins to lose value, making a resale less financially capable of recovering your initial investment.
If you select renting an instrument, there is often a commitment length that must be kept; while some places will allow you to switch to another instrument, they generally will not allow you to break the term. If you decide to rent an instrument try to agree to a term or commitment no longer than 6 months, this way if your child loses interest quickly it is not as damaging financially. Regardless of whether you rent or purchase the instrument, you should look for one that is in good shape mechanically as well as cosmetically.
There are several advantages of renting the equipment, one of the biggest is that repair and maintenance are not your financial obligation; instead, it is the obligation of the store where you rent your instrument from. Ask for referrals for stores from the music instructor since many are well aware of who is good and has very reasonable prices. You want to be careful that the instrument you receive is in good shape, especially if you are doing a rent-to own program, or a lease with purchase option.
There are several rental options, the first one is month to month, which requires a payment monthly but does not generally require a long term commitment, however the monthly payments are higher. You can also consider renting the instrument by the school year, this option typically can save 2-3 months worth of payments simply by making a lump sum payment. If you opt for a lease purchase plan, you should look for a plan where 100% of your rental amount is credited towards the purchase of the instrument to save money.
If you choose to rent an instrument then you are likely to be required to cover insurance for the instrument. The insurance will cover any damages or theft of the instrument as long as certain procedures are followed. If you purchase the instrument then insurance is optional but definitely recommended. If you own your home then your homeowners insurance will cover the theft, if you rent then the renters insurance will cover the theft, however neither will cover your child dropping the instrument and it cracking, or any other damage. Consider the astronomical cost of the instrument, many new instruments cost between $400-$2,000 which would need to be spent again to replace it in the event of damage, where as insurance would be much cheaper, less than $40 for a whole year on average.
While your child may be careful with the instrument, some are very fragile, and accidents do happen, as well as if the instrument is stolen how careful your child is suddenly does not matter anymore. Make sure the insurance company you choose has references, and is a reputable company, do not choose a company that has not been in business for a while, and has no references. There are several specific financial criteria you should consider when making the final decision on renting or purchasing.
First of all, if you can purchase an instrument for less or the same as a years worth of the monthly payments you will come out overall cheaper by just purchasing the instrument, as well as have something to sell to recover some of your cost if your child changes their mind. If you cannot afford to purchase a good quality instrument, consider renting one until you can find a good deal on a purchase. Never sacrifice quality for price; it can cause a huge difference in the sound of the instrument.