iPhone 5 or earlier Do you feel you’re paying less for the phone on the Upgrade Program instead of buying?

[bizack]

Situation 1: You buy an X at $999 and pay $499.5 in year 1 financing. So at this point you have paid $499.5. Then you decide you want to trade up to the max at $1099, so you pay $549.50 and now you have your max. You've paid $1099.

Situation 2: You buy an X for $999 and keep it 2 years.

But this isn't the end of the story... is it? You still have financing on the Max from the end of year 1 to the end of year 2. You owe more money in situation 1. At the end of year 2 in situation 1, you've spent like $500 more than situation 2 and you don't even own the whole max, you only own half of it and still have the other half to pay off , Edit: Now sure you can trade your X in to make it feel better. But you get a pretty bad trade-in value. You've fallen for exactly the illusion, you pay FAR more in situation 1 than situation 2, not only $100 more.

Edit: There is also a situation 3. Buy a brand new SE like I did 9 months ago for $190 on eBay and laugh at everyone who pays 5-10x more for a freaking phone. Clearly it must be like brain surgery because you're literally wrong in every way

For the love of sweet baby Jesus, this thread makes cute puppies want to cry.

You buy an iPhone through the IUP. You can pay it off after two years, interest free (you can actually pay it off earlier, if you'd like). You've paid $0.00 more than buying the phone outright on day 1 (assuming you've purchased from Apple, with AppleCare+).
OR
You buy an iPhone through the IUP. You make your monthly payments, interest free, and upgrade when the next iPhone comes out (let's say 12 months later). You can trade your iPhone in or sell it and use that money to pay off the loan. You've paid $0.00 more than the pay-in-full on day 1, upgrade and sell route that you would otherwise use.

I'm not under any illusion or impression that I'm saving money. I'm also not losing any money. I'm also not forced or pressured to upgrade my phone if I don't want or have to. I joined the IUP because I'm a tech nerd who was upgrading each year anyway, and this saves me the hassle of having to sell my phone on CL or Swappa.

And yes, of course Apple created this program to rope more people in. A $1000 phone is expensive for anyone, regardless of income. If you can lessen the upfront burden a bit, it lowers the barrier to entry. It's better than being locked into a two year contract with your carrier where the cost of your contract and the cost of the phone on a monthly basis is blurred.

 

[mashinhead]

I feel like you can recoup more than half the phone cost in the second-hand market, so I don't feel it's a better deal.

 

[kevjen888]

For the love of sweet baby Jesus, this thread makes cute puppies want to cry.

You buy an iPhone through the IUP. You can pay it off after two years, interest free (you can actually pay it off earlier, if you'd like). You've paid $0.00 more than buying the phone outright on day 1 (assuming you've purchased from Apple, with AppleCare+).
OR
You buy an iPhone through the IUP. You make your monthly payments, interest free, and upgrade when the next iPhone comes out (let's say 12 months later). You can trade your iPhone in or sell it and use that money to pay off the loan. You've paid $0.00 more than the pay-in-full on day 1, upgrade and sell route that you would otherwise use.

I'm not under any illusion or impression that I'm saving money. I'm also not losing any money. I'm also not forced or pressured to upgrade my phone if I don't want or have to. I joined the IUP because I'm a tech nerd who was upgrading each year anyway, and this saves me the hassle of having to sell my phone on CL or Swappa.

And yes, of course Apple created this program to rope more people in. A $1000 phone is expensive for anyone, regardless of income. If you can lessen the upfront burden a bit, it lowers the barrier to entry. It's better than being locked into a two year contract with your carrier where the cost of your contract and the cost of the phone on a monthly basis is blurred.

OMG, may I steal this reply from you and paste in all future IUP vs buying outright discussions? It explains clearly and precisely.

 

[shady281]

OMG, may I steal this reply from you and paste in all future IUP vs buying outright discussions? It explains clearly and precisely.

Not really. The IUP is a way to rope people into buying Applecare, not a phone. If you are the type to go IUP, you were going to buy an iPhone anyway.

 

[bizack]

Not really. The IUP is a way to rope people into buying Applecare, not a phone. If you are the type to go IUP, you were going to buy an iPhone anyway.

I would doubt that Apple's concern right now is a lack of people buying AppleCare.

Setting up a line of credit for 24 months with 0% interest and being able to choose your preferred iPhone model a few days before pre-order so that you basically click one button at 12:01 PST to complete your purchase is a compelling enough experience to attract both low and high income brackets. It directly competes with carriers who previously dominated the 'pay over time' for your phone strategy without all the wonky rules and stipulations.

I'm not saying Apple is doing anyone a favor. This is 100% set up to benefit Apple. However, it's one of the better options for those who either can't afford to pay outright or don't want to (I prefer to take advantage of the 0% loan and place my money into a money market account).

 

[cambookpro]

I used to buy a new phone outright every 2 years, and am under no illusions that the IUP is any cheaper. In fact, it's probably £200 or so more expensive per year.

However, 0% financing makes it very attractive. I could afford the full amount up front, but who wouldn't take a 0% loan (provided you're financially literate and can manage your repayments, which I realise isn't a given for everyone)?

I also never bought AppleCare in the past, but with the eye-watering screen replacement costs for the X, I think I would've done anyway.

It also means I don't have to worry about keeping the phone as pristine as possible for resale in two years' time. It's a lot nicer to just use it, and know Apple will take it back at the end of the year.

Just waiting until my upgrade date at the end of October now... XS Max in gold, please

 

[Kal El]

I used to buy a new phone outright every 2 years, and am under no illusions that the IUP is any cheaper. In fact, it's probably £200 or so more expensive per year.

However, 0% financing makes it very attractive. I could afford the full amount up front, but who wouldn't take a 0% loan (provided you're financially literate and can manage your repayments, which I realise isn't a given for everyone)?

I also never bought AppleCare in the past, but with the eye-watering screen replacement costs for the X, I think I would've done anyway.

It also means I don't have to worry about keeping the phone as pristine as possible for resale in two years' time. It's a lot nicer to just use it, and know Apple will take it back at the end of the year.

Just waiting until my upgrade date at the end of October now... XS Max in gold, please

It’s more expensive to do IUP in the UK than the USA as the cost is split over 20 payments as opposed to 24. So when you hand the phone back after 11 payments you have paid for more than half the phone in the uk (3/5ths when you factor in the initial payment). So on the iPhone XS Max it costs £1249 + £199 for AC+ in the UK and you pay £827.45 leaving £620.55

 

[Jdhommert]

I always have bought the phone outright each year, this year I finally caved and did the iUP for two reasons.

1. I hate the hassle of selling my phone. It’s a pain and makes me worry what I’ll get for it and who will buy it and will they try to claim it’s broke and screw me over or what

2. Especially with the Xr, I think value may not be as good in the future. If you know you can get 90% of what the top dog iPhone offers in a brand new phone for the same price as a 1 year old used phone, unless you want the specific things last years top model offfers (dual camera for example) why buy the old phone? Also it’s so many people doing payment plans now too. I just don’t think there’s gonna be near as much demand anymore for a used phone like in the past.

 

[1144557]

For the love of sweet baby Jesus, this thread makes cute puppies want to cry.

You buy an iPhone through the IUP. You can pay it off after two years, interest free (you can actually pay it off earlier, if you'd like). You've paid $0.00 more than buying the phone outright on day 1 (assuming you've purchased from Apple, with AppleCare+).
OR
You buy an iPhone through the IUP. You make your monthly payments, interest free, and upgrade when the next iPhone comes out (let's say 12 months later). You can trade your iPhone in or sell it and use that money to pay off the loan. You've paid $0.00 more than the pay-in-full on day 1, upgrade and sell route that you would otherwise use.

I'm not under any illusion or impression that I'm saving money. I'm also not losing any money. I'm also not forced or pressured to upgrade my phone if I don't want or have to. I joined the IUP because I'm a tech nerd who was upgrading each year anyway, and this saves me the hassle of having to sell my phone on CL or Swappa.

And yes, of course Apple created this program to rope more people in. A $1000 phone is expensive for anyone, regardless of income. If you can lessen the upfront burden a bit, it lowers the barrier to entry. It's better than being locked into a two year contract with your carrier where the cost of your contract and the cost of the phone on a monthly basis is blurred.

I wouldn't expect someone who bought a used SE in 2018 for under the cost of some people's monthly cell bill, and "laugh(s) at everyone who pays 5-10x more for a freaking phone," to have gotten it.

Not that I care at all what phone someone uses or cost them, but that is NOT the average Apple customer by any statistic.

This year the newer 8, 8 Plus and X were 54% of Apple's sales; with 7 and 7 Plus 81%. The use of older devices, 2016 and earlier, is the vast minority of the market.

 

[AustinIllini]

Honestly, I know it's more expensive than buying outright due to higher iPhone resale, but the convenience really cannot be beat.

 

[gurase]

The fact that people are willing to pay more for things if they can finance it has driven up the cost for everyone. Apple/the carriers can wrap it in a pretty package of “0% interest” to make it look like it’s a no brainer deal, but in this case the interest is just higher prices for everyone.

 

[1144557]

Honestly, I know it's more expensive than buying outright due to higher iPhone resale, but the convenience really cannot be beat.

True, unless you get empty box scammed and Paypal neither returns the money or phone. Then you have $0 resale and paid off the phone. Lot of risk these days in online selling expensive goods; especially with Paypal involved.

The fact that people are willing to pay more for things if they can finance it has driven up the cost for everyone. Apple/the carriers can wrap it in a pretty package of “0% interest” to make it look like it’s a no brainer deal, but in this case the interest is just higher prices for everyone.

Welcome to 2018 capitalism. This is everything, not just phones.

Why do you think there are few cars in the $20,000s anymore? Because they can sell $35-40-60k cars on payments to schmucks who shouldn't be buying more than a $20k car; because it's ONLY $599/month, not $40k. And equally, if you forced someone to write a $40k check (ok even $20k with trade-in lets say) what percent reasonably could do so? 5-10% of people tops? From what I have found 43% of Americans have car loans, and that s not counting leases which between the 2 I have seen about 85% total; I would guess realistically maybe 10-15% pay cash (not counting gifts from parents/spouse)? Sure if you get 0% financing that's another story with leveraging your money elsewhere, but a rare situation to get 0%.

Same with houses, they are worth what someone will pay. And I'd guess 90%+ of the time it's with a mortgage on a monthly payment. So who cares if sellers try to get more its "only" another $100/month on your mortgage.

This isn't an Apple problem, this is capitalism in 2018. And not saying it is right or wrong etc, just that it is how it is.

 

[bizack]

I wouldn't expect someone who bought a used SE in 2018 for under the cost of some people's monthly cell bill, and "laugh(s) at everyone who pays 5-10x more for a freaking phone," to have gotten it.

Not that I care at all what phone someone uses or cost them, but that is NOT the average Apple customer by any statistic.

This year the newer 8, 8 Plus and X were 54% of Apple's sales; with 7 and 7 Plus 81%. The use of older devices, 2016 and earlier, is the vast minority of the market.

Sorry, but that's just not true. You can feel free to look at the statistics of iPhone sales in the US here:
https://www.statista.com/statistics/804398/us-iphone-sales-by-model/

 

[fjd726]

Question re the IUP plan. It states that your credit card (not citizens) will pay for your monthly bill direct to Citizens. Won't that still leave you with APR charges on that card each month? Apple states a 0% loan basically but you're still left with your credit card charges that are being paid to Citizens each month. Confusing.

 

[kevjen888]

Question re the IUP plan. It states that your credit card (not citizens) will pay for your monthly bill direct to Citizens. Won't that still leave you with APR charges on that card each month? Apple states a 0% loan basically but you're still left with your credit card charges that are being paid to Citizens each month. Confusing.

From what my understanding, the initial payment (tax plus first month payment) has to be made on a credit card. Then after that you can log onto your Citizens account and change the payment method to your bank’s debit card.

 

[bambooshots]

Of course you feel that way. That's the whole point of breaking down the purchase into monthly payments.

 

[bizack]

Question re the IUP plan. It states that your credit card (not citizens) will pay for your monthly bill direct to Citizens. Won't that still leave you with APR charges on that card each month? Apple states a 0% loan basically but you're still left with your credit card charges that are being paid to Citizens each month. Confusing.

How do you propose paying the loan back each month? It's a line of credit that's equal to the cost of the phone not including taxes and one month's payment (you pay taxes in full and one month's payment upfront). The approval of the loan is contingent on your credit score and the I believe whether you're in good standing with the credit card you've provided.
If you want something different, you should look into a 0% intro APR credit card for 18 months but you'll obviously be making payments - unless you've found a way to purchase items without paying for them.

 

[jlocker]

I always get my iPhones at target mobile, they have phones, have a old phone trade-in program and I get a target gift card. Like $150 to $200 so i can get mobile cases, screen protector or get some food to feed my face.

 

[i hate phones]

Question re the IUP plan. It states that your credit card (not citizens) will pay for your monthly bill direct to Citizens. Won't that still leave you with APR charges on that card each month? Apple states a 0% loan basically but you're still left with your credit card charges that are being paid to Citizens each month. Confusing.

Pay your credit card off each month like you should already be doing to avoid interest charges.

 

[fjd726]

I understand all that but it basically boils down to an interest loan. You're just getting interest charges on your own card. So the pro for 0% loan is technically not correct.

 

[bizack]

I understand all that but it basically boils down to an interest loan. You're just getting interest charges on your own card. So the pro for 0% loan is technically not correct.

Technically it is a 0% interest loan. You're obligated to pay the monthly payments. If you're method of payment involves finance/interest charges, that's on you.

We can quickly break this down:

IUP provides a line of credit to you to cover the full cost of the phone + AppleCare, minus taxes and one month's payment. You're charged 0% in interest for the duration of this loan, which is 24 months.
OR
You pay with your own credit card. Unless you pay the phone off in full, you're now on the hook to pay off the phone + taxes in their entirety within 30 days. Otherwise you owe interest (usually 15-24%) on whatever balance you carry.

It's difficult to make this any clearer as to how/why this is a benefit.

 

[fjd726]

The issue is the IUP program mandates that you use a different credit card other than a debit card to pay off this loan. My point is, why not just buy the phone with that credit card instead of the IUP program. Not really a benefit other than a yearly upgrade. If the IUP were to send you a monthly bill, I could see where it could be worth it for their so called 0 APR.

 

[1144557]

The issue is the IUP program mandates that you use a different credit card other than a debit card to pay off this loan. My point is, why not just buy the phone with that credit card instead of the IUP program. Not really a benefit other than a yearly upgrade. If the IUP were to send you a monthly bill, I could see where it could be worth it for their so called 0 APR.

True but you just pay off your credit card then. The point of IUP is it is 0% if you pay it off now, 5 months in, 10 months in, etc. Most credit cards aren't 0% to let you pay if off whenever you want, you have to pay it off the month you charge it to avoid interest.

It's more flexibility than most payment methods to stay at 0% and make your choice.

 

[bizack]

The issue is the IUP program mandates that you use a different credit card other than a debit card to pay off this loan. My point is, why not just buy the phone with that credit card instead of the IUP program. Not really a benefit other than a yearly upgrade. If the IUP were to send you a monthly bill, I could see where it could be worth it for their so called 0 APR.

I believe I just explained the difference.

 

[fs454]

Although in a strict financial sense, the interest free loan available using the IUP makes good financial sense, psychologically, the program is a money pit. Everyone who joins it upgrades to a new phone each year, perpetuating monthly iPhone payments until they die. Most people not on the program don't upgrade their iPhone every year so they're buying fewer phones over the span of 5 years (for example) than someone on the IUP.

The IUP only defers the first year of payment (in a sense) once you get sucked into the system, but the illusion of saving money is only that. Eventually when a person comes to their senses and realizes that this program sucks them into buying more & more iPhones they'll see how they got suckered in to forking out cash to Apple every year.

When they finally grow weary of the perpetual payments year after year, they'll still have to pay off their last phone when they exit. In the end... all they'll have to show for it is having purchased way too many iPhones over the years, all at full price and essentially giving away all their perfectly good year old iPhones back to Apple for half price.
Sounds like a horrible deal to me.

Your logic here assumes the person is always unintelligent and a program like this is bad no matter what. I cannot agree even 1% with the idea that this is a "horrible deal".

For example, a user who gets a new $1000 (rounded even for sake of example) iPhone every two years by buying outright spends $1000 every two years. A user on iUP can get every new iPhone every launch day while still only spending the same $1000 every two years, as iUP comes out to around half the cost of the device plus applecare over the course of a year. This is overly simplified, but I don't see why this is a problem - it's not like anyone is paying interest or doing something against their will. If an extra tax payment and a $30 upgrade fee is a big dealbreaker for you, then so be it - you probably are overspending in this particular situation and it's smart to realize that. This is a convenience program that takes away the need to sell your device secondhand and offers a 0% no-matter-what loan for the device. That's a good deal.

I prefer not to be involved in the economics and sale of used phones. I couldn't care even a little bit less about gaining an extra hundred bucks off of it, it's a pain in the ass to find a buyer at the right price and not get scammed doing so. So while Apple may make out in the green on the traded in phone, the numbers make absolute sense for an every-2-year outright buyer who wants to get a phone every year for very close to the same money. If you want to opt out of the system, pay off the loan, just like any other loan. You know it's there, it's not going to be a surprise if you're even remotely smart with your money.