There are several ways to pay for this everyday necessity.
Reviewed by Pamela Rodriguez
Smartphones have become essential to daily life, but purchasing one outright can be expensive. In 2024, the average cost for a premium smartphone was $940. Financing offers an alternative to paying the full price upfront, making it easier to pay for a phone over time.
Financing options are available through retailers, cellphone carriers, manufacturers, and Buy Now, Pay Later (BNPL) platforms.
Key Takeaways
- Smartphone financing allows you to pay for a phone over time rather than all at once.
- Financing options include promotional retailer offers, carrier installment plans, and point-of-sale loans.
- Be aware of interest rates and fees that may apply to financing options.
What Is Smartphone Financing?
Smartphone financing allows buyers to pay monthly phone payments rather than paying the full price upfront. Typically, you’ll make a down payment, with the remaining balance paid off in installments over time. Some financing options require a down payment, while others offer a revolving line of credit.
Repayment terms vary, often spanning 24 to 48 months. Many financing offers advertise 0% interest if the balance is paid off in full within a specified period. However, if the balance isn’t fully paid by the end of the promotional term, interest may be retroactively applied to the original purchase price.
It’s important to note that financing a phone is different from leasing. With financing, you own the phone once the terms are fulfilled, while leasing only allows you to use the phone for a set period before returning it.
Important
Financing means consumers own the phone at the end of the finance term, while leasing only allows them to use the phone for a set period.
Retailer Financing
Financing a smartphone through a retailer may require a hard credit check for approval. While retail cards can offer promotional financing, the regular variable annual percentage rate (APR) for purchases may be substantially higher than a traditional credit card.
Retailers like Best Buy offer 24-month financing on unlocked phones and Geek Squad purchases above a certain amount using a Best Buy credit card. No interest applies if the balance is paid in full within 24 months of sale. Purchases made with a Best Buy credit card can also earn rewards.
Carrier Contracts
Cellphone service providers like Verizon allow eligible customers to pay off devices in installments with zero interest and without finance charges. Consumers commonly need a three-year contract to take advantage of this benefit, and an upgrade fee applies.
Those who do not plan to change cellphone companies benefit most. Consumers who switch cellphone companies could trigger a fee if it means breaking their purchase contract.
Some phone service providers, such as Spectrum, offer financing without a contract and bundling deals for TV, Internet, and landline services.
Manufacturer Financing
Both Samsung and Apple offer promotional financing for customers who want to purchase new smartphones and pay for them over time. With Samsung, consumers apply for a financing account; with Apple, they usually obtain an Apple Card.
The advantage of this type of financing is that consumers can use it to purchase more than just smartphones. Samsung Financing applies to TVs or appliances, while an Apple Card can be used to buy AirPods, an Apple Watch, iPads, or a Mac.
Buy Now, Pay Later (BNPL)
Buy Now, Pay Later (BNPL) platforms, also known as point-of-sale installment loans, allow consumers to make a small down payment on a smartphone and pay for the balance in four or more installments. Affirm, for example, partners with Visible to offer financing for smartphones over a 36-month period.
However, not all cellphone companies partner with BNPL platforms, so options may be limited depending on the provider.
How Do Consumers Qualify for Smartphone Financing?
To qualify for smartphone financing, most providers will require a credit check, though the exact qualifications vary by retailer, carrier, or manufacturer. Some providers may have more flexible eligibility requirements, such as allowing customers to finance a phone without a credit history or with a lower credit score.
What Are the Risks of BNPL?
While BNPL offers an appealing way to spread payments out over time, it can lead to debt accumulation if consumers take on multiple installment plans for various purchases. Failing to manage these loans could result in late fees and interest charges, potentially putting a strain on personal finances.
Does Financing Include Cellphone Insurance?
Certain credit cards, such as those offered by Chase, include cellphone insurance protection as a perk when you use the card to finance a new phone. Additionally, some credit cards offer extended warranty coverage and other benefits for electronics purchases.
The Bottom Line
Smartphone financing can be a convenient option for those who cannot afford to pay for a new phone in full upfront. However, it’s important to understand the terms of each financing option, including interest rates, fees, and payment schedules. Always read the fine print to ensure you’re fully aware of what you’ll owe and when interest may begin to accrue.