If you want to find out why we came to this conclusion, check out the rest of this article.
What does financing a phone mean?
Phone manufacturers, retailers, and sometimes private organizations have different platforms and plan to make smartphones available for people. The way phone financing works is that you are checked for eligibility and credit to determine the phone options available within your credit limit.
Sometimes, you may have to make initial deposits for some brands and models of phones while for others, you don’t. What is however important is that you get a great smartphone that you could not afford to pay for at the moment and choose the payment plan that will not be strenuous for you.
Types of phone financing
Manufacturing company financing – when you use this option, you are buying directly from the smartphone manufacturer. Retailer financing – this option is where certain retailers provide the phone to you at a rate that you have to pay back in a limited period, usually 24 months. Cellphone service provider – service providers like Verizon also provide phone financing to their customers who must compulsorily use their network throughout the repayment period or attract a penalty charge.
How phone financing works
As mentioned, there are plans and options for financing a phone to be chosen at your convenience.
The first thing to be done is to do a credit check on you and the eligibility is dependent on several criteria as laid out by the vendor. You can check out different vendors and their options before you settle. The payment plan often ranges between 6 to 48 months. The repayment option you choose should however be the most convenient for your financial status. You do not have to hurriedly repay if things are tight at the moment. you can spread out the balance. There is an interest rate that varies depending on the payment period you choose. It is safe to mention here that the 0% interest rate usually means you have to pay within a specified period, otherwise you will be charged interests.
Why it is worth it to finance a phone instead of buying it outright
You get a good smartphone that you could not afford presently. Your credit may be better than you imagined and you have access to a high-end phone. You are covered for warranties and upgrades.
The downside to financing a phone
You may be tied to a particular carrier throughout the period of financing the phone. The interest rate sometimes may make the total amount you pay double the original price of the phone, depending on the financing option you chose. There could be hidden charges or clauses in the agreement.
Conclusion
It may seem like financing a phone mean you are paying interest that could be avoided if you just bought it outright. The truth however is that financing a phone allows you to get a good phone and still be able to afford other things in the meantime. This way, you are spreading your liabilities over time and you have less to worry about.
What is the difference between leasing and financing a phone?
The difference between leasing and financing a phone lies in the bottom line. When leasing a phone, you have to give it up once you end your contract with your leasing agent even though you pay certain amounts for it. Whereas, when financing a phone, you are paying to buy it back completely after a certain period.
Should I lease or finance a phone?
You can buy out a leased phone after a while if you like it but if you do not want to hold on to a phone for too long and pay the full expense, leasing is your best option. Otherwise, financing a phone is for you if you want to own it eventually.
Am I eligible to finance a phone?
Your eligibility depends on how credit-worthy you are and a host of other criteria listed out by your vendor. You won’t know if you are eligible until you approach the dealer.
