Upgrade Program: Too Good to Be True?

[Cursor]

I currently have an iPhone 6 (64gb), and normally upgrade every two years. The total cost of the purchase every two years is about $790. With the new upgrade program, the yearly cost would be about $440 ($880 every two years). This seems like a great deal, if I'd want a new phone every year.

If I entered this program, do I have to turn in my iPhone 6 to Apple, or can I resell it on my own?

Also, the monthly fee doesn't seem to include sales tax, is that fee adjusted to include it?

If I decide not to upgrade to the next model, I assume I have to stay in the program for the full 24 months to pay off the current model phone, or can I just pay the difference right away?

Since this is a loan, basically, is there hidden interest somewhere?

Any answers would be greatly appreciated. Thanks.

 

[Bryan Bowler]

There are a lot of upgrade programs out there. Can you please tell us which on you're referring to?

 

[KoolAid-Drink]

There are a lot of upgrade programs out there. Can you please tell us which on you're referring to?

I believe he's referring to the Apple Upgrade Program; correct me if I'm wrong, OP.

 

[Spink10]

No its not too good to be true - it may be best for you. I will still pay for the iPhone and resell it.

 

[Cursor]

There are a lot of upgrade programs out there. Can you please tell us which on you're referring to?

Sorry, yes, the Apple upgrade program.

 

[melman101]

Ok I had the same exact questions to be honest.

http://www.apple.com/legal/sales-support/iphoneupgrade_us/

1. No interest, 0%.

2. You do not have to give up your iPhone 6.

3. Tax on the first payment.

Taxes and Fees. All applicable taxes and fees due on the purchase of the Financed iPhone and AppleCare+ are included in your first installment payment.

4. You can pay off the loan before it's up to finish paying off the phone to keep it if you want to.

 

[Supermallet]

I currently have an iPhone 6 (64gb), and normally upgrade every two years. The total cost of the purchase every two years is about $790. With the new upgrade program, the yearly cost would be about $440 ($880 every two years). This seems like a great deal, if I'd want a new phone every year.

If I entered this program, do I have to turn in my iPhone 6 to Apple, or can I resell it on my own?

Also, the monthly fee doesn't seem to include sales tax, is that fee adjusted to include it?

If I decide not to upgrade to the next model, I assume I have to stay in the program for the full 24 months to pay off the current model phone, or can I just pay the difference right away?

Since this is a loan, basically, is there hidden interest somewhere?

Any answers would be greatly appreciated. Thanks.

You don't have to turn in your 6 to join the AUP, but you can trade it in to get Apple Store credit.

The sales tax is paid upfront on the day of purchase, along with the first month's installment.

After 6 months of payments you can pay off as much of the phone as you like, up to and including the full remaining balance. If you do so, you will then own the phone and will not have to trade it in.

This is a 0% APR loan. The one caveat is that it seems Apple is requiring that you put the payments on a credit card, which can accrue interest if you keep a balance on the card. We have yet to find out if debit cards with a CC logo on it (like Visa or Mastercard) will be accepted.

 

[einmusiker]

Couple of things...
1. If you decide to keep the phone you must pay full price for it. Apple is not giving it to you at a discount.
2. If you figure in the amount you can sell your old phone for in your current two year upgrade method, you'll quickly realize you're saving a lot more money than by doing apples upgrade program. You're not really seeing the big picture in the math you've laid out

 

[bmms8]

Couple of things...
1. If you decide to keep the phone you must pay full price for it. Apple is not giving it to you at a discount.
2. If you figure in the amount you can sell your old phone for in your current two year upgrade method, you'll quickly realize you're saving a lot more money than by doing apples upgrade program. You're not really seeing the big picture in the math you've laid out

100% agree. Buy full price and sell privately. No other way around it..

 

[Knowimagination]

I currently have an iPhone 6 (64gb), and normally upgrade every two years. The total cost of the purchase every two years is about $790. With the new upgrade program, the yearly cost would be about $440 ($880 every two years). This seems like a great deal, if I'd want a new phone every year.

Ok so explain your numbers to me. where is the $790 every two years coming from? what's the breakdown? The 440 I get but it's hard to compare when I don't know the breakdown on that $790.

 

[16Paws]

Their upgrade program is definitely not too good to be true.

Things to also keep in mind on top of other things that others have posted. There is a good chance that since this is a loan outside of having an on going service the loan amount will show on your credit report. This may or may not be an issue, but it is something to keep in mind. When you do a payment program like this through a carrier it is tied into your service so the actual amount of the loan and financing doesn't show up on your CC.

I won't add to what others have said as they are dead on.

 

[16Paws]

Ok so explain your numbers to me. where is the $790 every two years coming from? what's the breakdown? The 440 I get but it's hard to compare when I don't know the breakdown on that $790.

I think they are getting $790 from 650 for the phone and 130 for AppleCare, but the math goes off the rails since at 1 year you have paid 395 excluding tax.

 

[16Paws]

The other way to look at it is that you can always just buy out the program at 12 months and sell privately if the sale price is better to sell it privately than to turn it in for the upgrade.

If the private sale price is lower, you just turn it in for an upgrade.

I guess the way I look at it what is the risk?

 

[melman101]

Yes, all those things are true, but it does exude something about "convenience". And we actually don't know if it will be on the credit report (although, my guess is yes).

And for people who don't like selling their iPhone on ebay/craigslist, the trade in is pretty good.

I do think that the first year is actually cheaper than the subsidized plan for the most expensive phone

$499(+tax on $499) + $129 = $629

vs $44.91(+tax on %1078) x 12 = $538

---

The second year is where you wind up paying, because you would normally not pay for a phone, but you would be keeping your 6S Plus.

I, for one, vote for convenience and my wife and I decided to cancel our 2 yr subsidy orders and go for the iPhone Upgrade Program.

I also like the fact that it's unlocked.

 

[Bryan Bowler]

Ok I had the same exact questions to be honest.

http://www.apple.com/legal/sales-support/iphoneupgrade_us/

1. No interest, 0%.

2. You do not have to give up your iPhone 6.

3. Tax on the first payment.

Taxes and Fees. All applicable taxes and fees due on the purchase of the Financed iPhone and AppleCare+ are included in your first installment payment.

4. You can pay off the loan before it's up to finish paying off the phone to keep it if you want to.

Op, thanks for clarifying that it's the Apple Upgrade program you're referring to. melman' advice is spot-on.

 

[Cursor]

Couple of things...
1. If you decide to keep the phone you must pay full price for it. Apple is not giving it to you at a discount.
2. If you figure in the amount you can sell your old phone for in your current two year upgrade method, you'll quickly realize you're saving a lot more money than by doing apples upgrade program. You're not really seeing the big picture in the math you've laid out

I haven't done the math, but even if you figure in AppleCare? It seems that figuring that in, it comes close to even, with the convenience of not having to take the time to research and sell it on any one of a dozen resell sites.

 

[Cursor]

Ok so explain your numbers to me. where is the $790 every two years coming from? what's the breakdown? The 440 I get but it's hard to compare when I don't know the breakdown on that $790.

The 790 includes my state's 6% sales tax.

 

[Supermallet]

Convenience in this is huge for me, I always find myself jumping through hoops to get phones on my off-years for upgrades. I also like that this separates the phone payments from the carriers. Anything that gets them closer to being just dumb pipes is good in my mind.

Additionally, selling privately isn't exactly a frustration-free or risk-free experience. Scam buyers are out there, and trying to get the best price for reselling can be difficult, especially if you don't want to sell until you've obtained the new phone.

 

[Cursor]

Convenience in this is huge for me, I always find myself jumping through hoops to get phones on my off-years for upgrades. I also like that this separates the phone payments from the carriers. Anything that gets them closer to being just dumb pipes is good in my mind.

Additionally, selling privately isn't exactly a frustration-free or risk-free experience. Scam buyers are out there, and trying to get the best price for reselling can be difficult, especially if you don't want to sell until you've obtained the new phone.

Exactly what I'm thinking. I need to do an exact cost breakdown, but the extra $20 or so seems like an ok convenience fee to me. I just didn't know if there were any hidden risks that I was overlooking.

 

[JAT]

Keep in mind, unless you don't pay on time or already have well over 2 dozen credit lines, more credit is good on your credit report. It may not be good for your personal finance desires, but it is good on the report.

 

[bmms8]

Exactly what I'm thinking. I need to do an exact cost breakdown, but the extra $20 or so seems like an ok convenience fee to me. I just didn't know if there were any hidden risks that I was overlooking.

Can you breakdown your costs again, I'm having trouble getting your calculations, thanks

 

[bibigon]

100% agree. Buy full price and sell privately. No other way around it..

I know you're right, but I'm having a math brain-fart understanding what I'm missing.

Lets say I upgrade at full price annually, on an iPhone 6S+ 128GB ($950), and then to the same iPhone 7 plus. I'll spend $1900 over two years, and recoup ~$500 by selling the 6S after a year. So after two years, I'll have an iPhone 7, and be out $1,400 net ($1900 - $500).

Alternatively, I do the upgrade program, at $44.91/month. After two years, I'm out $1,077.84, and have an iPhone 7 for my trouble.

So both scenarios leave me with an iPhone 7, and the only difference is what I paid for it. It seems like I'm coming out $330 ahead. What am I missing?

 

[16Paws]

Exactly what I'm thinking. I need to do an exact cost breakdown, but the extra $20 or so seems like an ok convenience fee to me. I just didn't know if there were any hidden risks that I was overlooking.

Also something else to consider is that if you pay for AppleCare upfront it is actually a little cheaper to use Apple's upgrade program. Since AppleCare is in the monthly costs you pay, if you upgrade at 12 months you have only paid off 1/2 of the $130 for AppleCare which ends up being over all $65 cheaper than buy the phone + Apple Care up front assuming you use AppleCare at some point in the first year (more on that later).

Math (using 16gb models and excluding tax because you will pay that either way):

Apple Upgrade
Price of Phone: 649
Price of AppleCare: 130
Total Financed: 779
Amount paid half way through: $389.5

Buy/Sell yourself
Price of phone: 649
Price of AppleCare: 130
Total Paid: 779
if you can sell the phone for 1/2 of the original price: -325
IF you don't use AppleCare over the course of the year and live in the US the TOS says you can get pro-rata of the remaining amount back (less $25 or 10% which ever is less and less service used -- (130 / 2) * 90%): -58.50

1. Total out of pocket if you never use AppleCare: 395.50
2. Total out of pocket if you use AppleCare in excess of the remaining amount: 454

If you don't use AppleCare they are about even if you do use AppleCare Apple's is a better deal and Apple's plan is way more convenient than anything else out there IMO.

 

[bmms8]

I know you're right, but I'm having a math brain-fart understanding what I'm missing.

Lets say I upgrade at full price annually, on an iPhone 6S+ 128GB ($950), and then to the same iPhone 7 plus. I'll spend $1900 over two years, and recoup ~$500 by selling the 6S after a year. So after two years, I'll have an iPhone 7, and be out $1,400 net ($1900 - $500).

Alternatively, I do the upgrade program, at $44.91/month. After two years, I'm out $1,077.84, and have an iPhone 7 for my trouble.

So both scenarios leave me with an iPhone 7, and the only difference is what I paid for it. It seems like I'm coming out $330 ahead. What am I missing?

Lets use your 6S and 7 logic by buying outright and selling. After two years you own your iPhone 7 outright.

44.91 per month on the 6s, you turn into apple and continue making payments on the 7 after a year (considering its in mint condition i assume?)

After two years you pay the 1077, and have a year left to pay on the 7, or turn it in for the 7s, but you own nothing in that process.

The difference is that can you sell your iPhone 7 after a year of ownership for more than $330? Yes you absolutely can.

Hope this helps and good luck!

 

[16Paws]

Keep in mind, unless you don't pay on time or already have well over 2 dozen credit lines, more credit is good on your credit report. It may not be good for your personal finance desires, but it is good on the report.

Except that new credit can hurt you by shortening your "credit history length". To determine history length they take all of your accounts and after their lives. So brand new credit can hurt you in some cases. Just keep that in mind. I am not saying it should be a deal breaker for anyone I am just saying it is a consideration.