Personal Loans

Cell Phone Financing That Won’t Wreck Your Budget

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Your wireless carrier would have you think that the only way to finance the newest smartphone is by signing a contract, but you have other options. You don’t have to sacrifice your freedom to switch providers just to outfit yourself with the latest tech at an affordable cost.

From third-party cell phone financing companies to personal loans, see which cell phone financing option is best for you.

See the full price of these popular smartphones

Financing can make a big purchase seem more attainable. Your new iPhone may cost $40 per month, but the real price is much higher. And by the time you finish paying off your phone, you may be due for an upgrade, leading you to enter a new payment plan.

Compare the MSRP for the most popular smartphones available now, keeping in mind that you can typically pay a higher price for more storage.

Your cell phone financing options

Switching carriers to get a deal

While you can’t get a phone for $200 for signing a two-year contract anymore, there is an upside to no-contract phone plans: You can switch carriers without paying a termination fee. Plus, you’ll own your phone outright when you’re done with the payment plan. But if you finance your smartphone through your network, you’ll be left with the remaining balance if you want to switch to another wireless carrier before you’ve paid off the phone.

In a bid to woo potential customers, some carriers offer deals on smartphones just for switching to their service. Browse the table below to see what deals national wireless carriers are running.

You may find such offers as:

  • Switch service providers and your new provider may pay off your current smartphone, up to a limit.
  • Buy one smartphone, get one free when you sign up for a qualifying plan.
  • Receive no-credit check cell phone financing when you trade in your old phone or buy a new one and sign up for a qualifying phone plan.

Financing through your current carrier

If you’re uninterested in going through the trouble of switching wireless carriers, your current wireless carrier likely offers no-interest financing. It may be hidden under the name of an “equipment installment plan” or “device payment plan.” Plus, you could get credit toward a new phone if you trade in your old smartphone, depending on its condition.

One downside of financing through your carrier: You could be tied down to your plan until you’ve paid the phone in full. If you want to switch before the device is paid off, you’ll be responsible for paying the remaining balance.

Plus, some carriers require a down payment on the device. For example, T-Mobile offers financing for the new Apple iPhone 11 Pro Max. You’ll pay a $349.99 down payment plus tax, then $31.25 per month for 24 months. It still equals out to the MSRP of $1,099, and your monthly payments would be lower than if you financed the phone through Verizon without a down payment: $45.83 per month.

What we like: You don’t have to go through the hassle of switching carriers; you may be able to get a discount on the phone if you trade in your current smartphone; you could secure 0% APR if the phone is paid off in full on time.
What we don’t like: You’ll be tied down to your carrier until the phone is paid in full; you could end up paying full MSRP for the phone with financing; some carriers require a down payment that may make financing unattainable to some; you’ll be subject to fees (such as a late payment fee) if you fail to make payments in full and on time over the financing period.

Financing through the phone company

You don’t have to finance through your wireless carrier to get a 0% APR. If you’re searching for no-interest financing for the newest iPhone or Galaxy, you could consider financing your device through Apple or Samsung.

If you purchase a phone through Apple, you could qualify for a 24-month, no-interest payment plan through Citizens Bank, depending on your creditworthiness. Samsung Financing is offered through TD Bank, and Samsung Galaxy phones can be financed at 0% interest for 24 months.

When you look at the bottom line, this financing is pretty similar to what you would get if you financed through your wireless carrier. But if you choose to finance directly through Apple or Samsung, you’ll have the freedom to switch wireless carriers as you see fit.

What we like: You’ll pay no interest as long as you pay in full within 24 months; you can easily switch between wireless carriers; you may get credit for trading in an eligible device.
What we don’t like: Credit check is required; you will more than likely pay MSRP without a trade-in.

Taking out a personal loan

With this option, you’re not tied down to your carrier but you are tied down to a loan with interest.

Whereas your carrier might allow for 0% APR financing, you’ll end up paying interest if you take out a personal loan to finance a cell phone. A 2019 LendingTree study found that consumers paid between 7.27% and 85.92% interest on personal loans taken out in the first quarter of 2019. That means that if you have subprime credit, you could end up paying nearly twice as much on a purchase funded through a personal loan.

Plus, many personal loans have a minimum that would be higher than the cost of most smartphones.

What we like: You won’t be tied down to your wireless carrier if you wanted to switch networks; some personal loans offer options for those with low or no credit, albeit with a higher APR.
What we don’t like: While most cell phone financing options carry no interest when paid on time and in full, a personal loan always has interest; you may have trouble finding a personal loan amount small enough to finance a cell phone.

Going through a third-party retailer

Financing your new phone could be as simple as heading down to your local strip mall. You might be surprised just how many third-party retailers sell cell phones and offer financing: Best Buy, Target and Walmart, to name a few.

Some retailers have their own terms and conditions, though. For example, Best Buy has a minimum purchase price of $649 for its 24-month, no-interest financing. Target also offers 0% APR financing on select smartphones, subject to credit approval.

Walmart’s cell phones can be financed through the third-party service Affirm, which charges between 10% and 30% interest, depending on your credit history. This financing option may require a down payment and is available on purchases between $150 and $2,000.

What we like: You won’t be tied down to a wireless carrier; you won’t pay interest on your purchase within certain terms; you could score a deal on the phone if you shop an older model or renewed phone.
What we don’t like: If you miss a payment or don’t pay it off within the time allotted, you could be subject to interest; some retailers offer payment plans that charge interest.

Charging to your credit card

If you have good to excellent credit, you might consider charging your new phone to a rewards credit card, especially if you have a credit card with a 0% introductory APR. If you’re confident that you can pay off the purchase without accruing interest, you could actually earn cash back, travel miles or rewards points just for charging the phone to your card and paying it off on time.

This option is best for responsible credit card users, but those with low or no credit may have a hard time qualifying for a rewards card, and an even harder time getting a competitive APR.

What we like: You could potentially avoid paying any interest if you pay off the phone within a card’s introductory 0% APR period; you’ll also earn points, miles or cash back; you won’t be tied down to a wireless carrier
What we don’t like: Not everyone would qualify for this type of credit card; if you carry a balance, you could end up paying an average of 15.13% interest on your purchase

The bottom line

Everyone has their own financial goals, budget and creditworthiness, so what might be the best financing option for one person might not be attainable for another. When you’re reviewing your cell phone financing options, you should ask yourself:

  • Which store offers the best price on the phone?
  • Which store offers the best perks? (i.e. buy one get one free smartphones, trade-in deals)
  • Which financing option works best with my credit history?
  • What is your budget? Is there a more affordable smartphone available?

Even with financing, the newest iPhone or other device might not fit into your budget. Take an in-depth look at your finances before deciding how to finance your cell phone purchase.


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