Most likely, you owe (I did!). These days, the act of purchasing phones outright has fallen by the wayside since brand new devices can cost an arm and leg. You may not have realized this, but in the past, customers would pay nothing or a much smaller amount upfront as part of a two-year contract and the remaining balance on the phone would be paid over the next 24 months. The process was relatively simple and you would own the phone when the contract was up. Wireless carriers now offer two different ways to get the fancy new cell phones into our hands and both involve making smaller monthly payments that are a bit easier to swallow. The financing and leasing plans offered at this time are more complicated and you may not be sure which plan you have or how it all works.
Option 1: Pay-to-Own Financing Plans
With this scenario, you owe until you own (usually).
The cost of your new phone is baked into your monthly bill and you own it when you’re finished with your term or contract. This is a popular option because it’s much easier to pay $25-$35 a month for your phone over two years than $600-$700 upfront. All carriers provide this financing option and it’s roughly the same amount of money through each provider. There are a number of different options through the various carriers and it can be enough to make your head spin.
Let’s take a 16GB iPhone 6S for example: you can buy it outright for $649.99 or $27.09 per month for 24 months through Sprint, T-Mobile, or Verizon ($27.08 a month, to be exact), or $21.67 for 30 months with AT&T. The carriers also offer various early upgrade programs (Verizon’s Device Payment program, Sprint’s Easy Pay, T-Mobile’s JUMP, etc.) but those plans typically fall in the middle of financing and leasing because you probably won’t own your phone when you’re done.
If you don’t want to be paying for your new phone for years without the possibility of ever owning it, the pay-to-own option is probably your best bet compared to leasing. At the end of the two years, you will own your phone and be free to do with it what you please, including selling it to MaxBack or any other buyback company when it’s time for a new one.
Option 2: Leasing Options
In this situation, you will owe and never own.
This option is more like leasing a car because at the end of your term or contract the cell phone goes back to the carrier. This is also part of your usual monthly payment but is slightly less because you’re essentially just paying to use the phone, not keep it. The downside to leasing is most plans contain numerous conditions and limitations so take a good look at the fine print. Most of the carriers offer a leasing option, though neither Verizon nor AT&T offer leasing programs at this time.
With Sprint Lease, you could pay $26.39 a year for 18 months for a 16GB iPhone 6S and have the option to upgrade to a new phone every year. T-Mobile’s lease program, JUMP! on Demand, allows you to pay $27.08 for 18 months and upgrade 3 times a year at any time. You also have the option of leasing straight through Apple and through their iPhone Upgrade Program, you would pay $32.41 per month for 24 months with a new iPhone every year and protection with AppleCare+ is included in that price. This option is more expensive and the coverage offered through AppleCare+ may not be as good as it is through the carriers, as it doesn’t cover theft or loss. You would have to pay extra for insurance through the other carriers, but the coverage may be better.
All things aside, if you like to have a brand new phone every year, leasing is probably for you. It would not be in your best interest if you ever plan to sell your phone, as it wouldn’t be able to be activated by someone else.
Find Out How You’re Financing Your Phone
Rightfully so, it is unclear to many which option they’ve signed up for. You can find out by contacting your carrier or paying very close attention to your bill, though that can be a chore in itself. If you’re still not sure, and you’re looking to sell your phone, doing what we call an “ESN (Electronic Serial Number) Check” will tell you if your phone is cleared for purchase by a buyback company, like MaxBack. It won’t tell you what type of financing plan you’re using. It will just report if your phone is still active on a carrier, if you still owe money on your financed phone, or if your phone has been reported lost or stolen.
There are two other types of ESNs that can be used to identify phones so don’t be confused if you hear them referred to as: IMEI (International Mobile Station Equipment Identity) or MEID (Mobile Equipment Identifier). Buyback companies aren’t able to purchase phones with bad ESNs/IMEIs/MEIDs because they are not able to be activated on a different network.
Moral of the Story?
Make sure you’ve paid your phone off before attempting to sell it. If you have a phone that you’ve paid for outright or paid off completely and are looking to sell it, look no further than MaxBack.com. MaxBack pays the max for phones, tablets, and more. Feel free to leave any questions or comments below!