You’ve seen it, haven’t you? That shiny, sleek, state-of-the-art smartphone that’s been seductively winking at you from the store window. It’s calling your name, whispering sweet nothings about high-resolution cameras and lightning-fast processors. But then, reality slaps you in the face like a wet fish. The price tag! It’s as if they’ve mistaken the phone for a small piece of real estate. But don’t despair, dear reader. There are ways to afford what may seem unaffordable. Welcome to the world of smartphone financing, a realm filled with intrigue, mystery, and the occasional deferred-interest promotion.
Understanding Smartphone Financing
Smartphones, those shiny little bricks of technology, have become a necessity for many. But with premium models costing an arm and a leg, financing the purchase may seem like a better option when cash is tight. Available through retailers, cellphone companies, manufacturers, and buy now, pay later (BNPL) platforms, smartphone financing allows you to make payments over time. You choose your dream phone, apply for financing, and if approved, you may have to make a small initial down payment, then pay off the remaining balance in installments. Sounds simple, right? But hold your horses, there’s more to it.
Financing terms can vary based on where you’re purchasing the phone and how much you’re paying for it. You may have to repay the balance over 24 or 48 months. And while smartphone financing can be advertised as 0% interest when paid in full within a specified number of months, that doesn’t mean it’s interest-free. If you fail to pay the balance in full before the end of the promotional period, then interest charges may be applied retroactively to the initial purchase amount. Sneaky, isn’t it?
Financing vs Leasing
Now, let’s clear up a common misconception. Financing a smartphone is different from leasing one. When you finance a smartphone, you own it at the end of the finance term, while leasing only allows you the use of a phone for a set time period. So, if you’re the kind of person who likes to own your gadgets, financing is the way to go.
Financing Through Retail Stores
The first option for financing a smartphone is through a retail store. Best Buy, for example, offers 24-month financing on unlocked phones. To use this type of financing, you need to have a Best Buy credit card. No interest applies if the balance is paid in full within 24 months of sale. Purchases made with a Best Buy credit card can also earn rewards.
However, financing a smartphone through a retailer may require a hard credit check if you’re opening a store credit card, which could cause a temporary drop in your credit score. While retailer cards can offer promotional financing, it’s important to keep in mind that the regular variable annual percentage rate (APR) for purchases may be substantially higher than what you would pay with a traditional credit card.
Financing Through Cellphone Service Providers
The next possibility for financing a smartphone is to go through your cellphone service provider. Verizon, for example, allows eligible customers to pay off devices in installments with no interest and no finance charges. You will need a two-year contract to take advantage of this benefit, and an upgrade fee also applies.
If you have no plans to change cellphone companies in the near term, then financing a new phone this way could make sense. The catch, of course, is that you’re locked into a new contract. If you decide to switch cellphone companies, you could trigger a fee if it means breaking your contract.
Financing Through Manufacturers
Depending on the type of phone in which you’re interested, you may be able to get financing through the manufacturer. Both Samsung and Apple, for instance, offer promotional financing for customers who want to purchase new smartphones and pay for them over time. The advantage of these types of financing is that you can use them to purchase more than just smartphones. Samsung Financing can be used to purchase TVs or appliances, while you can use the Apple Card to buy AirPods, an Apple Watch, iPads, or a Mac.
Buy Now, Pay Later (BNPL) Platforms
BNPL represents a growing trend in short-term financing. Also referred to as point-of-sale installment loans, BNPL platforms let you make purchases with a small down payment, then pay them off in four or more installments. Affirm, for example, lets you finance smartphones with Visible over 24 months.
BNPL financing may save you money, as some of these services don’t charge any interest or fees at all. However, not every cellphone company works with BNPL platforms, so that may limit where you’re able to use it. And one criticism of BNPL financing is that it can lead to a cycle of debt if you have multiple payment installment plans.
Final Thoughts
Smartphone financing could make sense if you don’t have the cash to purchase a new phone out of pocket. When comparing smartphone-financing options, it’s important to check the terms carefully, so you know exactly how much you’re spending and when interest may accrue.
Also, consider the possibility of using a rewards credit card with a 0% promotional APR on purchases to finance a new phone instead. This way, you’re not locked into a set installment agreement, and you can earn some rewards on your phone purchase in the process. Some rewards cards also offer built-in cellphone insurance protection as an added benefit. So, there you have it. The world of smartphone financing, laid bare. Now, go forth and conquer!
