Monthly Instalments v Paying Outright?

Discussion in 'iPhone' started by dubs83, Sep 15, 2016.

  1. dubs83 macrumors regular

    Joined:
    Dec 31, 2011
    #1
    I haven't upgraded my iphone in years, and was wondering what exactly the difference is between going with the installment plan ($31.24/month for 128GB iphone 7) and paying for it outright at retail ($749.99). I'm doing my upgrade through my carrier Verizon, not Apple.

    Not entirely sure yet if I will upgrade when the 8 comes out next year, and not really understand what the pros and cons are to each payment model.

    From what I understand though, if I do the monthly installment, I can't upgrade until the 24 month contract is up, correct? So that would mean I couldn't upgrade when the 8 comes out next year?

    Also, monthly installments mean I am technically renting the phone, correct? If I buy it at retail I can essentially sell it whenever I want?
     
  2. nickyD410 macrumors 6502

    nickyD410

    Joined:
    Sep 20, 2012
    Location:
    AZ
    #2
    Are you talking about the iphone upgrade program? If so they have 2 plans, one that allows you to upgrade after 12 payments but is more expensive because applecare + is required or a regular 24 month plan and you can upgrade after the 2 years are up.
     
  3. dubs83 thread starter macrumors regular

    Joined:
    Dec 31, 2011
    #3
    No, I'm talking about Verizon's upgrade program...which appears to be very similar to Apples...just without insurance (applecare) on Verizon. Just a little confused on what would save me money, because right now they appear to be the same price (whether I do the monthly installment or pay for it outright). Regardless a 128gb iphone 7s will cost me $750 it looks like, so why would I pay full retail for one, when I can pay it in installments?
     
  4. C DM macrumors Westmere

    Joined:
    Oct 17, 2011
    #4
    You end up paying the same amount. You own the phone in either situation and can do what you want with it (it's just with the payment plan you still need to keep on making payments so that it gets paid off). You can pay off what remains at any point and thus be done with the payment plan (and can upgrade at that point using another payment plan).
     
  5. dubs83 thread starter macrumors regular

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    Dec 31, 2011
    #5

    What would be the purpose than on buying the phone outright for $750?
     
  6. HaydenWI macrumors member

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    Sep 12, 2016
    #6
    Some would rather just pay in full up front and be done with it. As stated, you're paying the same cost of $750 in either scenario.
     
  7. Michael CM1 macrumors 603

    Joined:
    Feb 4, 2008
    #7
    I say you're a fool to pay the whole amount upfront if AT&T, Verizon or whomever is letting you do it in payments at 0 percent interest. Well you're a fool if you're using money that could pay down a debt or whatever. If you're someone who doesn't have any debt and pays that in actual money, hard to argue. But it's basically a 24 months same as cash offer. You can always pay it off early if you want to go elsewhere.
     
  8. sjsharks13 macrumors regular

    Joined:
    Jul 15, 2008
    #8
    Those are two separate plans and I believe the 24 month plan is not financed by citizens one. You can "upgrade" after two years on the 24 month plan because after 24 months you own the phone.
     
  9. C DM macrumors Westmere

    Joined:
    Oct 17, 2011
    #9
    Well, a few things to consider there. Some people might not qualify for financing for one reason or another. Buying outright with a particular credit card might provide more benefits (more rewards perhaps and/or extended warranty and/or additional protection). For some carriers financing means the device is locked until it is paid off, so those who might need or want an unlocked device might want to buy one outright.
     
  10. dubs83 thread starter macrumors regular

    Joined:
    Dec 31, 2011
    #10
    So if you do the monthly plan, you pretty much own the phone as soon as you pay off the remaining balance, correct? Also, I'm coming off a subsidized plan (i.e. I paid something like $300 for my iphone several years back but was locked into a 2 year contract). These plans seem more expensive, considering you have to pay the full price of the phone eventually. I must be missing something here though but all I remember is that I bought the iphone for about $300 with no additional monthly charges (other than carrier charges).
     
  11. C DM macrumors Westmere

    Joined:
    Oct 17, 2011
    #11
    You own the phone as soon as you get it, you just have a loan that you have to pay off.

    As for cost, it depends on your plan. On older plans the cost of the subsidy is built into the plan price and you are paying it every month, which is why you want to always upgrade as soon as you can otherwise you are paying for subsidy that you aren't really using. On newer plans you pay more for being in contract (for the subsidy) but get a discount for being on a payment plan (or sometimes for using a device that you bout outright). So it depends on your plan to see what is better for you as far as pricing.
     
  12. sjsharks13 macrumors regular

    Joined:
    Jul 15, 2008
    #12
    Who taught you about loans? Yes you have the phone but the bank that you are financing the phone with owns the phone. You are not the sole owner of the phone until the loan is paid off.
     
  13. HaydenWI macrumors member

    Joined:
    Sep 12, 2016
    #13
    They're not, though. You're still paying the full price of the phone either way, it's just structured differently.

    For example... For Verizon, in the past, you'd pay $199 for the base iPhone with a 2yr contract. But, the line access fee is $40/month. That comes out to $960 in line access charges over 24 months, plus the $199 for the device, for a grand total of $1159.

    Whereas on the payment plan, your line access fee is only $20. That is $480 over 2yrs, plus the $650 for the unsubsidized phone, for a total of $1,120.
     
  14. C DM macrumors Westmere

    Joined:
    Oct 17, 2011
    #14
    This isn't a car or a mortgage, no one holds the title or the deed on the phone. You were given a loan and you are spending it on the phone, but only the loan hangs on you, it's not secured by what you buy with that money.
     
  15. Aibocyrus macrumors 6502a

    Aibocyrus

    Joined:
    May 26, 2015
    #15
    You are correct.
    Think of it this way. You are essentially purchasing the phone either way. One way you're paying a lot more upfront. The other way has you making installments. There is no interest on the installments. You also end up only paying for half of the phone on the installment plan so long as you upgrade at 12 months.
    In my experience, both as a consumer and as a corporate carrier rep, it's cheaper to do installments almost any way that you cut it.
     
  16. Stereo macrumors member

    Joined:
    Jun 10, 2011
    #16
    Do trade-in with installments. I traded in my iphone 6 for $650 credit for a new iphone 7 128gb. I get $27 credit every month until the $650 is used up. So, basically im paying $5 a month for my new phone!
     
  17. mac.cali macrumors 65816

    Joined:
    Mar 16, 2012
    #17
    Little harsh don't you think? Some not not be able to afford the financing. Some prefer or have the resources to pay in full. I pay in full each time. In that case, I say you're a fool if you make payments. :D
     
  18. Zorn macrumors 6502a

    Zorn

    Joined:
    Feb 14, 2006
    Location:
    Ohio
    #18
    The smartest thing to do is just buy the phone outright on a good rewards credit card, then sell your prior phone on Swappa or whatever. You get back the highest amount of money, and you get rewards on the phone purchase and save the monthly fee on your smartphone access for the carrier bill. This only applies if you can also pay off the card right away. If you are going to carry the balance at some absurd interest rate, it no longer makes any sense and you're better off doing the carrier monthly installments.
     
  19. mjb59463 macrumors 6502

    Joined:
    Jan 10, 2012
    #19
    If the IUP or carrier financing had an interest rate, it would be a pretty horrible deal.

    For the IUP, the biggest thing is the hard credit pull. But if your score is high and you don't plan on getting a car/mortgage within the next year or so, the effect of the credit pull will be quite minimal and the pull will lose the vast majority of its reporting power after the first year.
     
  20. bohbot16 macrumors 6502a

    bohbot16

    Joined:
    Mar 22, 2009
    #20
    The difference between the payment plans vs paying outright essentially comes down to being locked into a future choice. Verizon is happy to give you a 0% loan because you're more likely to keep paying them a monthly bill. I know there's a special rule about Verizon, but for the other carriers your phone is locked to that carrier while you're on their payment plan. It's very similar to the new trend of it costing $5/month less if you use autopay.
     
  21. mattopotamus macrumors G5

    mattopotamus

    Joined:
    Jun 12, 2012
    #21
    I have always been the type to buy my phone outright, but if you know you will upgrade your iPhone every single year, it makes sense to get on these no interest plans. You avoid the hassle of having to sell your phone and put that money towards a new one, and you do not lose money in the process. Yes, you always are making a phone payment, but you are not losing money like you do buying outright and reselling each year.
     
  22. Sonmi451 Suspended

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    Aug 28, 2014
    Location:
    Tesla
    #22
    How did you do this?
     
  23. Stereo macrumors member

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    Jun 10, 2011
    #23
    With Verizon. Traded in my 6 for $650 credit.
     
  24. mattopotamus macrumors G5

    mattopotamus

    Joined:
    Jun 12, 2012
    #24
    I know verizon and ATT are doing this. It is a promotional offer and it valid through 9/30.
     
  25. Sonmi451, Sep 16, 2016
    Last edited: Sep 16, 2016

    Sonmi451 Suspended

    Joined:
    Aug 28, 2014
    Location:
    Tesla
    #25
    I just did a 6 on att and it says $160 credit. I think I need a promo code?

    Okay I see the plan now. Gotta do a 2 year agreement on a next plan not sure it's worth it will have to do more research.
     

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