Most folks buy cellphones with a monthly installment option. After all, who has more than $1,200 to burn all at once on a brand-new iPhone?
If you’re on a major carrier, the financing option is pretty straightforward (your cellphone payment is added to your bill every month), but it’s a different story if you go with a prepaid carrier.
Some prepaid carriers partner with third-party loan companies to offer financing options for new phones. Here are a few things to know before you use a loan company like Affirm to finance your new cellphone.
What prepaid carriers offer financing options?
One of the downsides of opting for a prepaid carrier (like Mint or Boost Mobile) as opposed to a postpaid carrier (AT&T, T-Mobile, Verizon), is that you normally can’t finance a new cellphone.
Typically, with prepaid carriers, you just order a new SIM card and plug it into your device and activate the service.
Well, if you’re the type of person who’s typically on top of paying off loans, you can finance your phone with zero interest — with a prepaid cellphone carrier.
Here are the most popular prepaid cellphone plans that offer phone financing options:
How does the financing work with prepaid cellphone carriers?
Since prepaid cellphone carriers don’t work with contracts, you can’t finance directly through a prepaid carrier. However, progressively more and more carriers are partnering with loan companies like Affirm to offer financing options.
To qualify for phone financing, you’ll need to agree to a credit check and wait for approval. If everything checks out, the loan company will pay for your new phone, and you’ll make payments to the loan company.
In most cases, you won’t have to pay a cent of interest if you manage to pay off the device over two years. But if you don’t stay on track of your payments, eventually you’ll incur interest.
How to avoid paying interest on your cellphone
When you buy a phone with a third-party financier, like Affirm, you’ll need to decide on a payment plan. Make sure to choose the option that says 0% APR and no interest. If you don’t see a “no interest” option, then the cellphone carrier you chose doesn’t have a standing agreement with that financier.
For example, if you wanted to buy a new iPhone 13 with Cricket Wireless and selected Affirm financing, you should see a 0% APR no interest option that’s paid over the course of two years.
Likewise, if you went through the same process without going through a carrier first, you’d have to pay interest regardless of the payment plan.
Going directly through the prepaid cellphone carriers is the only way you can get a no-interest financing loan for your new phone.
Why should I go with a prepaid cellphone carrier?
Prepaid cellphone carriers offer significantly cheaper rates compared with the postpaid plans from AT&T, Verizon and T-Mobile.
For example, you can get an unlimited talk, text and data plan from Mint Mobile for $30 per month.
To put that number in context, the cheapest unlimited plan from one of the big three carriers is T-Mobile’s Essentials plan, which costs $60 per month. You can pay half of what you’d pay for an unlimited plan with a postpaid carrier.
The two main catches about prepaid carriers have been that, until recently, you couldn’t finance phones and that, secondly, your data speeds can throttle when the network is congested.
Now that you can indeed finance your phone with a prepaid carrier, there’s only that one major downside.