So, Apple Upgrade Program Costs More than Buying and Selling Each Year... Still Worth It?

[dhy8386]

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?

For the carrier plans, It actually varies by state as some states allow you to roll taxes into monthly payments however with this program because of possibility that you upgrade before full payoff, it may have to be calculated differently.

With that's said, it shouldn't impact your calculation. Just assume you pay full taxes in either scenario (upfront purchase vs the upgrade program) and they cancel each other out. You don't pay any more taxes under the upgrade program. If you upgrade one time and then hold the second phone for two years you will have paid sales tax twice. Same if you bought a phone, sold it after one year, and bought another and held for 24 months.

 

[dhy8386]

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.

I was assuming you had to sell the phone w the AppleCare to get the better pricing. At least last time I looked at the auctions, the ones with AppleCare were going for the slightly higher values. If you can get the perfect storm of the higher price every time without AppleCare and the. Get the refund amount, it of course will improve the economics a bit more. Good point, thanks.

 

[maflynn]

It significantly simplifies the process of owning the latest and greatest. Boom,

Like every other leasing program for the phone (Next, Edge, etc) its more financially sound to sell the phone and buy a new one outright but the issue is not really money but simplicity. People are willing to pay a monthly fee, and trade their existing phone in rather then go through the hassle and risk of selling their iPhone.

 

[TheMacApple]

rather then go through the hassle and risk of selling their iPhone.

Yep, at Starbucks a few years ago some girl starts screaming at some dude running out the door. Turned out she was selling her phone, guy gets it in his hand, runs out the door

 

[CaptHook]

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.

I'm still not following. For me it says the iPhone 6S 64GB is $37.45/month. This is listed under the price of $749, so one can conclude that the monthly payment does not include tax either.

So what I am see is this:
*Note, I am assuming AppleCare is taxable in this example. I have never purchased it so I am not sure but it likely varies by state.

Apple Plan
$39.70 ($37.45 + 6% tax) x 24 = $952.80

Pay in Full
$749 + $129 = $878 + $52.68 (tax) = $930.68

Granted, the difference is less than $20, but it still costs more. Again, this is assuming you were going to purchase AppleCare. Since they are using a third-party bank, this is not surprising that there is some fee associated with financing/leasing/renting a $749 phone.

 

[brianric]

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

Not so good for me. I live in New Jersey but I'm getting my iPhone 6S Plus at the Apple Store in Delaware. I get Apple Care. If I go with the iPhone upgrade program I have to pay the New Jersey 7% sales tax upfront. If I pay the full purchase price at the time of picking up the phone, I pay for the phone plus Apple Care. It's up to me at the time when I do my NJ income tax the following year to declare all out of state purchases.

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.

I use to feel that way until I went to do laundry at the laundromat, put two Tide laundry in my pocket where my iPhone was in, only to have one of the pods rupturing and in effect destroying my iPhone.

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.

I have Amex, but IMO Apple Care is worth it over monthly insurance payments through Verizon.

 

[Joe1602]

For the carrier plans, It actually varies by state as some states allow you to roll taxes into monthly payments however with this program because of possibility that you upgrade before full payoff, it may have to be calculated differently.

With that's said, it shouldn't impact your calculation. Just assume you pay full taxes in either scenario (upfront purchase vs the upgrade program) and they cancel each other out. You don't pay any more taxes under the upgrade program. If you upgrade one time and then hold the second phone for two years you will have paid sales tax twice. Same if you bought a phone, sold it after one year, and bought another and held for 24 months.

If the tax is rolled into 24 monthly payments, and you trade in the phone at 12 months, then you pay half as much tax as the full price option. It absolutely affects the calculation.

 

[dhy8386]

If the tax is rolled into 24 monthly payments, and you trade in the phone at 12 months, then you pay half as much tax as the full price option. It absolutely affects the calculation.

No it isn't. Then you would be able to avoid paying sales tax. It doesn't work that way, ever, with any type of program unless the provider is specifically offering to pay the sales tax. If you were calculating it like that then you were mistaken.

 

[aneftp]

Not so good for me. I live in New Jersey but I'm getting my iPhone 6S Plus at the Apple Store in Delaware. I get Apple Care. If I go with the iPhone upgrade program I have to pay the New Jersey 7% sales tax upfront. If I pay the full purchase price at the time of picking up the phone, I pay for the phone plus Apple Care. It's up to me at the time when I do my NJ income tax the following year to declare all out of state purchases.



I use to feel that way until I went to do laundry at the laundromat, put two Tide laundry in my pocket where my iPhone was in, only to have one of the pods rupturing and in effect destroying my iPhone.



I have Amex, but IMO Apple Care is worth it over monthly insurance payments through Verizon.

Not everyone lives has access to Delaware or Oregon sales tax rates (0%). You situation is different than others who pay some type of sales taxes but it's also applies to other major electronic items where u want to avoid sales taxes (aka big screen TVs furniture etc).

AppleCare achilles heel is its lack of coverage for theft/loss. ATT has $6.99 mobile insurance that covers theft/loss with a declining deductible ($199 first 6 months, $150 months 6-12 and than $99 after 12 months of mobile insurance coverage without a claim). Verizon and Sprint charge more per month for their insurance plans

Insurance is different to people. While it doesn't hurt me having to rebuy another $700-900 cell phone (it may sting a little). I am more worry about the bigger picture when it comes to insurance. I can umbrella policy to protect myself from multi million dollar lawsuit. Some people choose to carry the min car insurance. I don't. Same with cell phone insurance. That's why the debate rages on.

 

[Joe1602]

No it isn't. Then you would be able to avoid paying sales tax. It doesn't work that way, ever, with any type of program unless the provider is specifically offering to pay the sales tax. If you were calculating it like that then you were mistaken.

It doesn't work that way, ever? Obviously you've never leased a car.

 

[nrvna76]

I'm still not following. For me it says the iPhone 6S 64GB is $37.45/month. This is listed under the price of $749, so one can conclude that the monthly payment does not include tax either.

So what I am see is this:
*Note, I am assuming AppleCare is taxable in this example. I have never purchased it so I am not sure but it likely varies by state.

Apple Plan
$39.70 ($37.45 + 6% tax) x 24 = $952.80

Pay in Full
$749 + $129 = $878 + $52.68 (tax) = $930.68

Granted, the difference is less than $20, but it still costs more. Again, this is assuming you were going to purchase AppleCare. Since they are using a third-party bank, this is not surprising that there is some fee associated with financing/leasing/renting a $749 phone.

Apples website shows that phone is $36.58 per month.

 

[Joe1602]

It doesn't work that way, ever? Obviously you've never leased a car.

Just found an interesting thread on this:
https://forums.macrumors.com/threads/scammed-on-at-t-sales-tax.1917869/

Too bad they don't structure the upgrade program as a lease to give us a break on the tax, in most states anyway.

 

[pudcraft]

I had no idea this could be done. I thought I had found every loop hole! I still have the older more everything plan which lets me do 2 year contracts.

So to do this right...

1. Add a line to account for new phone, pay the subsidized cost for 2 year contract

2. Have them switch the contract to a tablet contract, thus $10 per month vs $40.

3. Swap sims and donesky

Love it. Resell value calculated roughly same as current 6+, this is a great option.

 

[dhy8386]

Just found an interesting thread on this:
https://forums.macrumors.com/threads/scammed-on-at-t-sales-tax.1917869/

Too bad they don't structure the upgrade program as a lease to give us a break on the tax, in most states anyway.

That's exactly my point since it's not a lease. It's a finance. And leasing a car is a bad example since its specifically regulated and has special requirements state by state compared to other leased items.

In any event, the economics are very comparable except for the more involved schemes above or or (and this is probably the optimal way to look at it) you consider that every other year you are buying the phone at the special contract pricing so call it approx 50% of full price. So over a four year period you actually save ~800 for the cost of carrier lock in from my example above.

 

[CaptHook]

Apples website shows that phone is $36.58 per month.

Not for me. It shows $37.45.

 

[pudcraft]

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.

Exactly this. You nailed it. I did the math on every possible scenario and it boiled down to what you said. If you don't mind buying/selling, independently, your out of pocket is far nicer than the upgrade program scenario. Lastly, the biggest factor it boils down to, according to the numbers I have put together, is cash flow. If you can deal with the large up front cost, then it's a great way to go. If spending the 2 year contract cost of $399 (6s+ 64gb) will effect you, then the upgrade program could be for you.

Lastly, don't forget the access line fees from carriers. 2 year contract = $40 (vzw). BYOD or Edge = $25 ($15 discount off $40) or $15, respectively.

Personally, I am going the 2 year contract route the OP states.

 

[randian]

I don't see how the calling plan matters to the analysis once you go BYOD or Apple Upgrade, and if it does you'd get a much better deal buying service from an MVNO or one of the major's prepaid divisions than a $15 BYOD discount.

 

[GadgetGeek407]

I have been thinking about this Apple Upgrade plan for some time now and I have some interesting points based on the comments:

I have a ten line family plan with AT&T on mobile value share plan, and always like unlocked phones cause we travel, more often than not I get like 7-8 iPhones a year in full price cash. So I spend like over $6,000 a year up front, than after the fact sell my existing phones and the phones typically end up costing me like $300-350 per phone.

1. Its a lease yes however like anything else in life when you finance you have the option to pay off early and own it, its smart to me because you are using OPM other peoples money, and therefore can put your own money to work and more often than not make more than the cost of payments.

2. At 12 months personally , I am sure I can sell the phone for more than my remaining balance and there make a profit, of about $150 after paying it off and still get a new phone every year. This is a better option to pay less up front and monthly and still make a profit without putting my own full cash out. In comparison I think my cost per phone may be similar or possibly more but in reality I wont spend as much cash up front plus I get apple care plus out of it which I never got but will add value to my resale.

I personally don't think of it as not owning it and it being a lease cause like anything I can pay it off anytime and its mine, realistically speaking as long as I have it, its mine ,I don't go so deep as to thinking I don't own it cause I am paying payments on it. I on the contrary feel that if I can save my initial outlay and pay payments and still be able to make a profit plus get the same unlocked phone, why not.

The few questions I have is that since I buy everyones phone and pay for them, can I have 6-7 phones on this apple plan all under my credit or do they all need to be separate?

I understand taxes on full amount of phone and apple pay plus first month needs to be paid up front at time of purchase.

Essentially these phones i am being told will be sim free factory unlocked phones, therefore different from full priced att verizon and tmobile phones that I am use to buying every year, since they are unlocked anyways. I don't understand the difference here besides not having sim card in the phone.

Who else is in boat and can relate and provide some feedback? I think the financing option in my case makes more sense cause we are talking about like 7 phones.

 

[nrvna76]

I don't see why this program wouldn't be better for anybody, especially you with so many phones. It's just another option, if you want to trade in you can, if you want to sell it you can. And they would be your phones it's not like a lease, more like a loan on a car but you have a guaranteed trade in price. I don't think you'd have a problem buying that many phones as long as your credit will qualify you and you're an authorized user on the account.

 

[ZipZap]

I'm still not following. For me it says the iPhone 6S 64GB is $37.45/month. This is listed under the price of $749, so one can conclude that the monthly payment does not include tax either.

So what I am see is this:
*Note, I am assuming AppleCare is taxable in this example. I have never purchased it so I am not sure but it likely varies by state.

Apple Plan
$39.70 ($37.45 + 6% tax) x 24 = $952.80

Pay in Full
$749 + $129 = $878 + $52.68 (tax) = $930.68

Granted, the difference is less than $20, but it still costs more. Again, this is assuming you were going to purchase AppleCare. Since they are using a third-party bank, this is not surprising that there is some fee associated with financing/leasing/renting a $749 phone.

Since you cannot get the Apple plan without Applecare. The savings is greater when the Pay In Full does not include it. Consider that in 1 year the IP7 will be released and will likely be a phone most will want. If you want to compare it with warranties, use squaretrade. Its cheaper and we "Pay in Full" folks have that option.

 

[passingapple]

So how easily can you guys sell iphone 6s around this time next year and for how much?

I don't buy applecare and even considering that, the difference is almost nothing. For instance, I buy iphone 6s 64gb for full price, that's $749 + tax. Usually tax rate is 4-9%, so assume that it's $800.

With the upgrade program, you are throwing away around $440 ($36.58 x 12 + tax on the first installment) to upgrade. Therefore I'd need to sell the phone for at least $360 to even pull off the same. That's how much 6 64gb in flawless (like new) condition can get now. So I don't understand how folks write that one can easily make much more by selling as I don't see how anyone can sell unlocked iphone 6 (in good condition) now for $450-500.

For references, I have looked at sites like Gazelle, Nextworth, etc for about 2 weeks now and it's not enough to make a huge difference (against the upgrade program). e.g. 6 64gb good for $325 or flawless for $365
source: https://www.gazelle.com/iphone/iphone-6/unlocked/iphone-6-64gb-unlocked/495682-gpid
Even worse it's not worth selling 64gb and 128gb as the difference between that and 16gb is like only $20-40 at the most when full price difference is $100-200.

The only slightly decent place is Amazon's trade-in program (even after their 8% fee), but it's still not enough to make a big difference (e.g. $385 after 8% fee for 6 64gb good condition). Of course one can always try to sell on ebay uSell, or craigslists, but often those are either huge work and/or not super reliable.

 

[GadgetGeek407]

So how easily can you guys sell iphone 6s around this time next year and for how much?

I don't buy applecare and even considering that, the difference is almost nothing. For instance, I buy iphone 6s 64gb for full price, that's $749 + tax. Usually tax rate is 4-9%, so assume that it's $800.

With the upgrade program, you are throwing away around $440 ($36.58 x 12 + tax on the first installment) to upgrade. Therefore I'd need to sell the phone for at least $360 to even pull off the same. That's how much 6 64gb in flawless (like new) condition can get now. So I don't understand how folks write that one can easily make much more by selling as I don't see how anyone can sell unlocked iphone 6 (in good condition) now for $450-500.

For references, I have looked at sites like Gazelle, Nextworth, etc for about 2 weeks now and it's not enough to make a huge difference (against the upgrade program). e.g. 6 64gb good for $325 or flawless for $365
source: https://www.gazelle.com/iphone/iphone-6/unlocked/iphone-6-64gb-unlocked/495682-gpid
Even worse it's not worth selling 64gb and 128gb as the difference between that and 16gb is like only $20-40 at the most when full price difference is $100-200.

The only slightly decent place is Amazon's trade-in program (even after their 8% fee), but it's still not enough to make a big difference (e.g. $385 after 8% fee for 6 64gb good condition). Of course one can always try to sell on ebay uSell, or craigslists, but often those are either huge work and/or not super reliable.

To each their own but why would you not want to sell for as much as possible, I think gazelle and all these sites are the biggest ripoff. You in fact on CL cannot find a nice iPhone 6 64gb for 500, very few out there for 400

 

[MICHAELSD]

Assuming Apple even lets you pay off the phone prior to the end of term, you would owe $509 after a year to pay off a 64GB 6S Plus. The 64GB 6 Plus goes for around $600, maybe $650 with AppleCare, before fees so the minimal profit you would make isn't worth the risk.

 

[GadgetGeek407]

Assuming Apple even lets you pay off the phone prior to the end of term, you would owe $509 after a year to pay off a 64GB 6S Plus. The 64GB 6 Plus goes for around $600, maybe $650 with AppleCare, before fees so the minimal profit you would make isn't worth the risk.

What risk? There is no risk, if one thing i learned from this thread is that people are bad with money lol

 

[MICHAELSD]

What risk? There is no risk, if one thing i learned from this thread is that people are bad with money lol

The risk of being scammed is realer than you'd think, and easier for buyers than sellers.

Simply not worth the time to pay it off and sell it for under $100 in profit.