How to get cell phone finance

How to get cell phone finance
(Image credit: Getty)

If you’re someone who likes to have a top of the range cell phone in your pocket, then you’ll know just how expensive the latest models can be. Sometimes buying the best smartphones outright can set your bank balance back by a four-figure sum, and that’s the kind of money that a lot of people simply don’t have readily to hand. 

Fortunately, as the price of phones has gone up, so the number of ways in which you can pay for them have grown too. In fact, cell phone financing is now almost universally available through the best cell phone providers, retailers and manufacturers alike. The cell phone market is so competitive that deals are usually available all year round. However, as our round up of the best Black Friday cell phone plan deals will testify, the competition ratchets up several notches further when the Holiday season sales arrive. So how exactly do you get cell phone finance and what is the best way to make a new phone more affordable to you, ahead of the best Black Friday USA deals really starting to arrive?

Cell phone financing through your current carrier

If you’re content with the plan and service that your current carrier provides, most will have cell phone financing options to try and help you afford a new phone:  

The simplest, and usually most cost-effective option, is to trade in the device you want to replace. Indeed, if it’s a newer cell phone and in good condition, you might be offered enough in exchange that you can find the extra money required to settle the balance on your new one. 

0% installment plans
The cell phone financing option probably most commonly offered by carriers is an interest-free installment plan. This will allow you to spread the cost of the phone over a number of months without having to pay any interest on top. You’ll usually need to sign up to a two-year plan and some will want a down payment at the start, although trading in your old cell phone will often suffice.  

Some carriers might offer the chance to lease a new cell phone, usually for a term of around two years, whereby you’ll need to make monthly payments, but will never actually own the phone. It might seem a viable option, but remember that you’ll have an agreement that you need to keep with the carrier for the next however many years, and if it turns out you do wish to switch, you’ll be liable to pay whatever is outstanding on the lease before you can go. 

How to get cell phone finance

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Cell phone financing with a new carrier

If your existing plan has ended and you’re happy to switch carriers, then a whole new world of money saving signup offers will be at your door. The type of cell phone finance on offer will usually vary between providers and also the type of cell phone that you want. Usually, however, they can be split into two groups: those that will provide you with the phone for free, and those that will lower the monthly installment payments that you need to make.

Cell phone financing through a manufacturer 

If you want to buy an unlocked phone through the manufacturer and then arrange a carrier later, Apple, Samsung and some other manufacturers have cell phone finance options available too. You can also usually arrange a trade-in to get the initial cost of the new phone down. 

Interest-free installments
Similar to carriers, interest-free installments are usually an option with manufacturers, with Apple using Citizens One to arrange loans in this way and Samsung tied up with TD Bank. Remember, however, that these cell phone finance loans are only likely to remain interest-free if you keep up with your monthly payments. Also consider that a credit check will usually be made when you apply for these plans - if you haven’t got the good credit rating that is typically required, you’re likely to be turned down. Using the best credit repair services is a good way to try and improve your credit score and lower the risk of rejection. 

Credit cards
If you’re hankering for a new iPhone, or many other Apple products for that matter, including an iPad, Mac, or Apple Watch, interest-free financing is also available via the Apple Card. In the case of cell phone finance for an iPhone, taking out an Apple Card and using it to fund your purchase will give you a period of 24 months in which to pay what you owe before interest starts to be applied. You should also get 3% cashback on your spend, but making sure you keep to your payment schedule and pay down the balance during the 0% period is key.   

If you’re not buying from Apple, or you don’t want an Apple Card, many of the best credit cards offer generous interest-free periods too. You’ll also usually need a decent credit history to get any credit card, so bear that in mind as well. 

How to get cell phone finance

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Cell phone finance via retailers

Similar to when you’re buying a mattress on finance, or a refrigerator, many retailers offer what are called point-of-sale finance options just when you’re about to pay at the checkout. Cell phone finance point-of-sale plans tend to work in the same way, typically offering the option to take out a credit card. Many will also offer the chance to “buy now pay later” under arrangements made with finance providers such as Affirm and Afterpay. Such an option might seem convenient and could prove useful if you’ve got no discernible credit history or bad credit. This is because point-of-sale finance companies will usually determine your eligibility around your income rather than a credit check. 

However, as point-of-sale finance often involves taking out a loan, take careful note of the terms of any agreement and the interest that will be charged - some will offer 0% financing, but others might charge a whole lot more. Remember there will be consequences in terms of penalty fees and maybe higher interest rates if you overstretch yourself and can’t keep up with payments. Also consider that some point-of-sale finance options will involve a credit check, so always find out what is involved first. Finally, be aware that some point-of-sale finance plans are lease arrangements where you don’t own the phone, which are often expensive, and could tie you into a deal that will need paying up before you can leave.

Personal loans

If the point-of-sale loan options are not the type of cell phone finance you’re open to, taking out one of the best personal loans online ahead of making your phone purchase is another option. If you have a good credit score, and the best rates and terms are available to you, a personal loan could provide the cell phone financing solution you’re looking for. 

Of course, you’ll need to get your application done in advance, and there’ll be a check on your credit. And the same rules that apply for all the cell phone financing options about being able to afford the repayments that you’re due to make also apply here too - the one thing you don’t want to have to use that new cell phone for in the future is to make a call to the best debt consolidation companies

Tim Leonard

With over 20 years’ experience in the financial services industry, Tim has spent most of his career working for a financial data firm, where he was Online Editor of the consumer-facing Moneyfacts site, and regularly penned articles for the financial advice publication Investment Life and Pensions Moneyfacts. As a result, he has an excellent knowledge of almost areas of personal finance and, in particular, the retirement, investment, protection, mortgage and savings sectors.