Watch Out for These Cellphone Installment Plans

Man looks surprised by his cell phone
Photo by Mangostar / Shutterstock.com

These days, many people consider smartphones more of a necessity than a luxury. The problem is that smartphones can be very expensive.

If you want the best device available, you’re going to pay close to (if not more than) $1,000 for your smartphone. Midrange models aren’t exactly cheap, ranging anywhere from $300 to $600.

One way to circumvent spending a ton of money all at once on a cellphone is by taking advantage of installment plans.

However, not all payment plans are created equal, and there are some you might want to avoid altogether. We’ll guide you through installment plans you should watch out for, as well as steer you toward some that might be a better fit for you.

Third-party financing with smaller carriers

The installment plans you should be a little wary about are mainly those offered by third-party lenders.

These companies partner with smaller carriers to offer loans to customers in order to finance phones. Of course, as with most loans, these will come with interest charges, and that’s the big issue here.

Interest rates as high as 21% could mean you are paying much more for your phone than its original cost. Some of these companies might offer zero-interest plans, but you’ll likely have to meet qualifying credit requirements. You’ll often have the opportunity to sign up for payment plans ranging from six months to two years.

These companies aren’t necessarily nefarious. In fact, if you can get a low interest rate, they might be fine for you. There’s even a chance that with such low interest rates, the cost of your plan and phone might still be less than your monthly payment with one of the major carriers.

You should also note that these plans will not include early upgrades. Unless you’re willing to pay for two phones at once, you’ll have to pay for the phone in full before getting a new one.

Here is a list of some smaller carriers that offer installment plans on the iPhone 11:

Installment plans with major carriers

All three of the major carriers (AT&T, T-Mobile, Verizon) offer installment plans for their supported devices. These payment plans usually come with no interest.

However, they include terms of two years or more. This is the carriers’ way of keeping you signed on to their plans, as you will not be able to leave and bring your phone to another carrier until it’s completely paid off.

With no interest, you will not have to pay extra for your phone, but you have to be willing to stay with the same carrier for at least two years.

All three major carriers offer early upgrade programs, meaning you will not have to have your phone completely paid off before getting a new one. Typically, you’ll have to have at least 50% of the phone paid to qualify for early upgrades, and the phone should be in good working condition to trade-in for your new one.

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