So why would you NOT buy a phone using an installment plan?

andyACEcandy

macrumors 6502a
Original poster
Feb 11, 2008
863
14
Taking T-Mobile for instance...

Why would I not do the installment plan? $0 down and free financing? Basically pay $27/month for 24 months ($648)... with the option of paying it off if I want.

As opposed to dropping the $648 all up-front now...

Am I missing something here?
 

rambo47

macrumors 6502a
Oct 3, 2010
589
101
Denville, NJ
Taking T-Mobile for instance...

Why would I not do the installment plan? $0 down and free financing? Basically pay $27/month for 24 months ($648)... with the option of paying it off if I want.

As opposed to dropping the $648 all up-front now...

Am I missing something here?
There really is no good reason. I guess some folks don't want the increased monthly cost hanging over their heads and have the cash to lay out right up front. But free financing is sweet!
 

andyACEcandy

macrumors 6502a
Original poster
Feb 11, 2008
863
14
There really is no good reason. I guess some folks don't want the increased monthly cost hanging over their heads and have the cash to lay out right up front. But free financing is sweet!

Does it hurt your credit score? I guess that'd be a reason why you wouldn't do an installment plan...
 

ayeying

macrumors 601
Dec 5, 2007
4,548
11
Yay Area, CA
I think they check but not hurt. But at the same time, with 0% interest and literally just splitting your full payment price 24 times, I don't see why you wouldn't. If there was interest, then that would be a reason.
 

vaultwit

macrumors regular
Sep 20, 2012
185
7
Yeah I think some people just prefer the idea of paying it off up front if they have the funds. That way, you have the peace of mind knowing you aren't continually paying some amount every month. And remember, the phone isn't technically yours until you pay it off. Until then, it's T-Mobile's phone... Just like how the bank technically owns your car until you finish your payments.
 
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andyACEcandy

macrumors 6502a
Original poster
Feb 11, 2008
863
14
I think they check but not hurt. But at the same time, with 0% interest and literally just splitting your full payment price 24 times, I don't see why you wouldn't. If there was interest, then that would be a reason.
I've never done it before but am considering buying the iPhone 6+ on an installment plan this year.
 

dave420

macrumors 65816
Jun 15, 2010
1,404
96
I want to correct what vaultwit said. You really do own the phone. There is a huge difference between an unsecured loan and a secured loan for a car. T-Mobile does not want your phone back.

One disadvantage to monthly payments is if your credit card offers an extra warranty or insurance if you break it. In that case you will only get the extra protection if you pay the full price.
 

NewbieCanada

macrumors 68030
Oct 9, 2007
2,565
34
I don't know about the US, but the cheapest monthly plan I could get in Canada would be around $80 a month if I don't pay the full cost upfront. By paying the full cost of the phone I can get a much better plan (unlimited calling and data) for $30-$40 a month.

$40 a month savings over 2 years is $960. $50 is $1200. Way more than the few hundred I'll "save" on the phone.
 
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rritterson

macrumors 6502
Jul 10, 2008
357
1
DC USA
Taking T-Mobile for instance...

Why would I not do the installment plan? $0 down and free financing? Basically pay $27/month for 24 months ($648)... with the option of paying it off if I want.

As opposed to dropping the $648 all up-front now...

Am I missing something here?
-Have to preorder through T-mobile website
-Hard pull on credit report which can lower score
-Go into debt, even if interest rate is zero
-Credit card doubles my warranty if purchased with credit card, but monthly EIP payment to credit card doesn't count.
-Credit card offers theft/loss protection, but monthly EIP payment doesn't qualify

The perfect financial decision would be to finance it, because you could buy $750 in bonds and then cash out $31 a month to pay the monthly payment, leaving you with the interest earned after two years.

But if you don't want the debt and have the cash, why go through the hassle of setting up the payment plan when you can just pay it all at once?
 

andyACEcandy

macrumors 6502a
Original poster
Feb 11, 2008
863
14
-Have to preorder through T-mobile website
-Hard pull on credit report which can lower score
-Go into debt, even if interest rate is zero
-Credit card doubles my warranty if purchased with credit card, but monthly EIP payment to credit card doesn't count.
-Credit card offers theft/loss protection, but monthly EIP payment doesn't qualify

The perfect financial decision would be to finance it, because you could buy $750 in bonds and then cash out $31 a month to pay the monthly payment, leaving you with the interest earned after two years.

But if you don't want the debt and have the cash, why go through the hassle of setting up the payment plan when you can just pay it all at once?


Are you certain about the hard pull on the credit report? If so, that's definitely a good reason NOT to.
 

Prise

macrumors regular
Dec 14, 2008
241
0
There would be two reasons.

1. With a good credit score, you'd get better terms financing it on your own. For instance, the Chase Freedom credit card with $100 rebate with 15 months 0% interest.

2. Pay up front with a credit card to earn a larger rebate on your spend. For instance, $400 rebate on the Chase Sapphire Preferred.

If those two options aren't available or palatable, then the EIP program is excellent for 0% financing.
 

powerbook911

macrumors 68040
Mar 15, 2005
3,734
158
I would love to do monthly payments, but you can't do them with subsidized phone.

My 3 phone plan before tax is $140 with subsidized contracts. My line has unlimited data. $140 a month for 3 lines, with subsidized phones, I cannot beat that price with the plans NEXT is available on. If I had to buy the phones at full price, 10 GB data would be about $140, BUT bill would have extra $35 x 3 more per month for devices, $105 per month more, over 24 months, $2,500.

As it is now, with subsidized phone pricing plus the $40 activation fees, it comes to only about $950, versus the $2,500.

It depends on your account and what type of plans you are grandfathered into whether installment NEXT plans are good for you or not.
 

mattopotamus

macrumors G5
Jun 12, 2012
13,224
3,360
Obviously this is on a small scale, but this is why so many people are in debt. If you cannot afford a device, don't buy it. The only thing you should finance is a house and maybe a car. People always turn $27 a month into $50 into $100, etc.
 
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andyACEcandy

macrumors 6502a
Original poster
Feb 11, 2008
863
14
Bleh, I was just wondering the reasons really.

Plan on buying it outright with my credit card to get the points/miles lol
 
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Prise

macrumors regular
Dec 14, 2008
241
0
Bleh, I was just wondering the reasons really.

Plan on buying it outright with my credit card to get the points/miles lol
Right!

Or, if you have the "electronic stores" selected on the US Bank Cash + card, you'll receive 5% cash back on the entire purchase!
 

ayeying

macrumors 601
Dec 5, 2007
4,548
11
Yay Area, CA
I've never done it before but am considering buying the iPhone 6+ on an installment plan this year.
I'm actually doing the same. Switching from AT&T to T-Mobile. I'll pay the same price but instead of 550 Minutes with only 1 line having unlimited, I'll have 2 lines with unlimited and 1 line with 1GB high speed then 2G speed and unlimited talk.

But depending on the model you get, you might have to pay up front.
 

travis64

macrumors 6502a
Nov 18, 2008
745
307
NEW YORK
Thats easy
T-mobile pre paid $30 a month,pay your phone off in full and save money

Also they did a hard credit pull on me last year when i went to tmobile.that does hurt your credit score a few pts.they will tell you dont worry its a soft pull!no credit check for pre paid
 

jeyf

macrumors 65816
Jan 20, 2009
1,187
540
read the fine print
on the Barclays / Apple plan if you just miss one payment you owe a huge interest penalty.
 
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