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So, Apple Upgrade Program Costs More than Buying and Selling Each Year... Still Worth It?
- Thread starter MICHAELSD
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I think you have to calculate it as follows to make a true comparison.
Assume two scenarios: one where you do the apple program and the other
where you buy outright and sell on eBay every year. Assume a period of
4 years (48 months). Then assume another year (60 months total) during
which you hold onto the previous phone purchased/upgraded in year 4.
So by the end of the 60 months, under both scenarios, you own the
phones outright and the phones are two years old. And AppleCare+ has
expired in both cases.
This is for a 64gb plus model.
In the upgrade case, you pay 40.75 for 48 months or $2405. You have
upgraded to 4 phones (month 1,13,25,37).
In purchase/sell case, you pay $979 every year (phone at 849 plus AC+
at 130), for four years or $3,916 (purchased at months 1,13,25,37). At
the end of each of those periods (months 13,25,37) you sell phone, net
of fees for $500 or $1500. Your net out of pocket is $2,416. So you
are out slightly more money, not including the time value of money
which is minimal anyway. If your net sale price were to rise to $550
or $1650, your total out of pocket would be $2,266 and you would be
ahead a nice steak dinner in NYC.
I guess it depends on how much you are confident in selling your
device for and the hassle you want to ensure. But overall, I think you
are in same position except for the fact that the apple program
provides significantly better cash flow to you then under the under
scenario, if that's important to you.
Not sure what happens to tax in Apple upgrade scenario but assume
payments go up by your states tax rate so should offset in both cases. And obviously if you do any scheme with contract pricing then will likely improve the economics of the purchase and sell case.
Assume two scenarios: one where you do the apple program and the other
where you buy outright and sell on eBay every year. Assume a period of
4 years (48 months). Then assume another year (60 months total) during
which you hold onto the previous phone purchased/upgraded in year 4.
So by the end of the 60 months, under both scenarios, you own the
phones outright and the phones are two years old. And AppleCare+ has
expired in both cases.
This is for a 64gb plus model.
In the upgrade case, you pay 40.75 for 48 months or $2405. You have
upgraded to 4 phones (month 1,13,25,37).
In purchase/sell case, you pay $979 every year (phone at 849 plus AC+
at 130), for four years or $3,916 (purchased at months 1,13,25,37). At
the end of each of those periods (months 13,25,37) you sell phone, net
of fees for $500 or $1500. Your net out of pocket is $2,416. So you
are out slightly more money, not including the time value of money
which is minimal anyway. If your net sale price were to rise to $550
or $1650, your total out of pocket would be $2,266 and you would be
ahead a nice steak dinner in NYC.
I guess it depends on how much you are confident in selling your
device for and the hassle you want to ensure. But overall, I think you
are in same position except for the fact that the apple program
provides significantly better cash flow to you then under the under
scenario, if that's important to you.
Not sure what happens to tax in Apple upgrade scenario but assume
payments go up by your states tax rate so should offset in both cases. And obviously if you do any scheme with contract pricing then will likely improve the economics of the purchase and sell case.
I'm reading the terms of the program on Apple's website. There are some important gotchas that everyone should be aware of when you go into this program:
BTW the terms above shouldn't shock anyone, all other cell phone providers plans are worse than this. For example, T-Mobile requires you to to exchange your phone in good condition as well, but sells their insurance plan separately with a $120 deductible. Still, if you can afford to buy the phone outright you'll be 100% unrestricted and you can probably sell it for more.
I'm still going to go this route because it fits my current situation, but I think that everyone should read through the really short terms doc to make sure they're aware of what they're getting into.
- You must make your payments with a credit card. Debit and other forms of payment are not allowed.
- Your first payment is charged immediately upon signing and includes all taxes and fees on the iPhone and AppleCare in addition to the first month's installment payment.
- If you're planning on upgrading your phone 12 months from now, you should make sure to trade in your phone when you have made exactly 12 payments. Apple will buy you out if you make the equivalent of 12 or more monthly payments, so if you decide to upgrade at the 13 month mark, it will be no different to Apple than if you had done it at the 12 month mark, other than you've decided to make an additional payment.
- Once you give your phone back to Apple, you can't get it back. If you've made 12 payments and upgrade your phone while in an installment plan and then decide to return your newly upgraded phone back to Apple because you're in the 14-day return window of the new plan, then you will owe the remaining balance of your previous installment plan and are not allowed to get your old phone back.
- This isn't exclusive to the iPhone Upgrade Program, but it's worth mentioning: the iPhone 6S and 6S+ AppleCare service fees have been increased from $79 per instance to $99 per instance. That's significant because you're required to exchange the phone in good condition (free of broken components). Chances are that a lot of people will need to fix their phone when they exchange it, so buy a case.
BTW the terms above shouldn't shock anyone, all other cell phone providers plans are worse than this. For example, T-Mobile requires you to to exchange your phone in good condition as well, but sells their insurance plan separately with a $120 deductible. Still, if you can afford to buy the phone outright you'll be 100% unrestricted and you can probably sell it for more.
I'm still going to go this route because it fits my current situation, but I think that everyone should read through the really short terms doc to make sure they're aware of what they're getting into.
Good point but your math is slightly off. You can get prorated refund for unused portion of AppleCare+.
So if you sell your phone after 1-year, you can get about $51.60 refund after 10% cancellation fee, bringing the total down to $3,602.40 before taxes.
If you sell every year, remove the apple care cost and the trade becomes more appealing. Sell on Swappa or CL and further reduce your costs. That's what I do every year
Since Apple charges for tax and fees (?) on the full price of the phone, this would assumedly mean they require customers to pay the taxes on the full price each time they upgrade even if they only pay for 12 monthly payments per phone, which is sort of a deal-breaker for me since it means paying double the tax.
Frankly I am extremely tempted to move over to the Apple Upgrade Program. It significantly simplifies the process of owning the latest and greatest. Boom, just easy monthly payments and a trade every 12 months. I definitely get the enjoyment out of upgrading each year that would make it worthwhile. Simply, I love the program. Never having to think about the upgrade process again at a reasonable cost is a major plus.
But... through my experience purchasing an iPhone yearly I have found a way to do so cheaply. Stay with me for a second as I explain: I purchase a new iPhone, take the SIM card out, and place a tablet on the line to make an otherwise $40/month line cost only $10/month (then use the iPhone on my main line, removing my previous iPhone at no cost). Verizon allows customers to do this, and reps even have recommended it. With the new changes, to my surprise Verizon still allows this for customers on the older plans.
Thus, the cost of purchasing an iPhone on a contract then transferring the contracted line to a $10/month tablet line is quite a bit less than the upgrade program.
Let's do some math:
Buy 64GB iPhone 6s Plus for $430 (with tax) + $40 activation fee + switch line to $257 ($24 * $10.70) tablet plan = $727, net $500 after fees selling phone = $227 cost per year
If we want to compare apples-to-apples we can factor in the cost of AppleCare+ although I don't personally purchase it. Since the AppleCare+ cost is $129 for two years of coverage let's say that's $65/year so the cost is really $292 if we perfectly compare it.
Apple Upgrade Program: simply purchase for $42.45/month * 12 = $509 cost per year.
Frankly I have a way to save an additional $150 on buying a new iPhone yearly through promos by creating a new line so the cost disparity is even higher.
Now, if Verizon closed the tablet contract loophole then the Upgrade Program would be a no-brainer but I am giving up my ability to upgrade cheaply each year to upgrade more conveniently. Although, another plus of the Upgrade Program is that it would allow me to forgo my upgrade date of December 2016 on my main line for the iPhone 7 (Plus) but I could simply begin the program next year.
Hopefully my math helps those out there on Verizon on older plans deciding whether to use the Upgrade Program, and this thread can help me decide
Did you factor in the savings from canceling your spare line ? That would be savings of around $165 per year for 2 years.
If you sell every year, remove the apple care cost and the trade becomes more appealing. Sell on Swappa or CL and further reduce your costs. That's what I do every year
I'm going to guess that there will be fewer people buying unlocked from the secondary market after AUP. Most people do it to avoid cell phone contracts and/or having it unlocked. AUP fills that void. I think the market is going to flood this year and next, driving your resale value down.
If u make all 24 months u will own the phone outright. It's marketed as an upgrade program. But it's really a 24 month no interest program.
Except there is interest. They might not call it that, but it certainly is more expensive.
There is no interest. It priced out as I explained in my other post. For example, here I am in Texas and I am quoted on the website $36.58 per month for the iPhone 6S in 64GB flavor.
So, take the base price of the phone ($749), the price of AppleCare+ ($129), tack on our 8.25% sales tax and you get:
($749 + $129)*1.0825 = $950.44
Subtract the sales tax, which you will be paying upfront on your first payment ($72.44, or 8.25% of $878) and you're left with.. well, $878. $878 divided by 24 is $36.58, which is the quoted monthly payment.
So, no interest. I hope this made sense.. technically, it's cheaper to do the Upgrade Program for a full two years than to buy the phone and AppleCare+ outright because, as many would say, money now is worth more than money later. I know $950 may not be the craziest sum, but you definitely could invest it or have it for a rainy day.
Yup. I'm going for it because if I learned anything in my finance classes.. it's that my money is worth more when it's not all tied up in a phone.
Do you think they'd care if you went ahead and started a NEW program to get the 7? I was going to grab it when it came out regardless and just keep making payments on both for that year that they overlap (I'd give the 6S to my sister), but if they don't allow it I can always find another avenue.
This is a very interesting point which I hadn't considered. That plus the fact that I never buy AppleCare+ makes the full-price option a better deal for me than the upgrade program.
Can anyone confirm if you pay sales tax up front, or if it is rolled in to your monthly payments?
Dumb question. For those banking on purchase outright. Do you all think the market for a 1 year old phone will still be good resale?
Just take a fictuious number and say 1 million people do the lease and turn it in one year from now. Thats got to flood the market causing pricing to go down... that and as a consumer looking for a used phone...would you rather buy one from apple, or some guy at Starbucks?
Just take a fictuious number and say 1 million people do the lease and turn it in one year from now. Thats got to flood the market causing pricing to go down... that and as a consumer looking for a used phone...would you rather buy one from apple, or some guy at Starbucks?
Bottom line and many articles have stated this about the iPhone upgrade program
1. For those who are going to buy Apple care plus when they get an iPhone. Than the iPhone upgrade program is a great option because it is built into the monthly price option. Again there is no interest being charged. Apple simply divided the payments over 24 months with the $129 Apple care plus included automatically
2. If you don't care much about AppleCare plus. Than the iPhone upgrade program becomes less appealing because for most of us who take care of our phones. That's $129 Apple care plus built into the payments is most likely going to be pure profit for Apple. Since we are very unlikely to use the insurance. I have owned every single iPhone. I take care of my phone. I live in Florida. Have a swimming pool at my house. Go to the beach often. I am not reckless like many people who take pics with their phone in the water. Get sand and scratch their phones etc. I don't bring my phone anywhere near the water.
Plus I have Amex for the first 90 days for accidentally damage and lost insurance. I keep my phones 11-12 months. So Amex has me covered for 3 months already. Apple regular warranty covers everything except accidents and water damage.
For me. AppleCare isn't worth it. Which is why I am leaning towards a full price purchase and not the iPhone upgrade program.
1. For those who are going to buy Apple care plus when they get an iPhone. Than the iPhone upgrade program is a great option because it is built into the monthly price option. Again there is no interest being charged. Apple simply divided the payments over 24 months with the $129 Apple care plus included automatically
2. If you don't care much about AppleCare plus. Than the iPhone upgrade program becomes less appealing because for most of us who take care of our phones. That's $129 Apple care plus built into the payments is most likely going to be pure profit for Apple. Since we are very unlikely to use the insurance. I have owned every single iPhone. I take care of my phone. I live in Florida. Have a swimming pool at my house. Go to the beach often. I am not reckless like many people who take pics with their phone in the water. Get sand and scratch their phones etc. I don't bring my phone anywhere near the water.
Plus I have Amex for the first 90 days for accidentally damage and lost insurance. I keep my phones 11-12 months. So Amex has me covered for 3 months already. Apple regular warranty covers everything except accidents and water damage.
For me. AppleCare isn't worth it. Which is why I am leaning towards a full price purchase and not the iPhone upgrade program.