With today's smartphones running you into the thousands of dollars, the best way to go about snagging that shiny new iPhone or Samsung Galaxy is often through a carrier's phone financing option.
Phone financing comes in many forms, with the most prevalent options being installment plans, leasing programs, and upgrade discounts—but which one is the right option for you?
We'll go over the installment plan offerings from each of the Big Three carriers—AT&T, Verizon, and T-Mobile— as well as third-party financing plans options for MVNO carriers like Visible and Mint Mobile to help you understand what you're getting before you buy your next phone.
Installments and upgrades at a glance: Big Three national carriers
| AT&T | Verizon | T-Mobile | |
|---|---|---|---|
| Term length | 36 months | 36 months | 24 months |
| % paid before upgrade | 100% (standard plan) 50% (Next Up plan) 2% (Next Up Anytime plan) |
50% | 50% |
| Stand-out feature | Next Up ($6/month): Early upgrade at 50% Next Up Anytime ($10/month): Upgrade after at least one payment |
Pay off 50% anytime for early upgrade | JUMP! program: Pay $7-25/month for early upgrade at 50% |
| View AT&T plans | View Verizon plans | View T-Mobile plans |
Phone financing options: Installments vs. leasing
There are two distinct ways in which you can finance your next phone:
- Opting for an installment plan to pay off the total cost of your phone in smaller chunks.
- Leasing the device from your carrier.
Phone installment plans
Phone installment plans are the same concept as financing a vehicle: You purchase your device with a small amount of money down (or none at all) and then pay off the cost of the phone over a period of time. The cost of your phone is broken up over two or three years, depending on the agreement, and the monthly charge is added to your overall phone bill. Once you've paid off the cost of the phone over time, you then own the phone outright.
However, if you leave the network before your agreement term is up, you'll owe the remaining cost of the phone in full. That said, many carriers also offer switching incentives where they'll pay off early termination fees and/or the remaining phone cost that you still owe if you switch to their network.
Phone installment plans have essentially replaced traditional phone plan contracts. Carriers no longer require you to stay with their network for a specific amount of time—you are free to come and go as you please. Instead, they now offer major incentives, usually in the form of trade-in deals or buy-one-get-one offers, that are tied directly to their installment plans. To get the deal, you'll need to purchase the phone through monthly payments (i.e., an installment plan). Then, your discount will be applied to your bill for the term of your installment agreement.
Phone leasing agreements
Like installment financing agreements, phone leasing plans are very similar to vehicle leases. You'll "purchase" the phone from the carrier at a discounted upfront cost, then pay a monthly fee to use the phone. Once the leasing term is up, you can either:
- Swap the old phone for a newer one (at likely a more expensive leasing cost)
- Pay off the remaining cost of the phone immediately to own it outright
- Switch to an installment plan to pay off the remaining cost that way.
Phone leasing is a very attractive option for those who always want the latest and greatest device; after all, you're paying a cheaper rate for a brand-new phone, and you get to upgrade to an even better one in a few years. But just like with a vehicle, it's important to do the math and consider whether your goal is to eventually own the phone. You may owe a buyout fee if you purchase the device outright, which could make the overall cost higher than if you had bought it to begin with.
Also consider that, like with a vehicle, your monthly payment will rise if you choose to upgrade to a new phone after a couple of years, whereas your payment to purchase the phone via an installment plan doesn't change. And most carriers even let you pay off your financed phone early.
AT&T phone payment options and early upgrade plans
AT&T always seems to have great deals, but what about when you finance your phone? When you finance your new phone with AT&T, you have three options:
- AT&T Installment Plan: You have 36 months to pay off your device, and you can only upgrade once it's 100% paid off.
- AT&T Installment Plan with Next Up: For an additional $6/month, you may upgrade after paying off at least 50% of your phone.
- AT&T Installment Plan with Next Up Anytime: For an additional $10/month, you may upgrade as soon as you've made at least one installment/upgrade payment.
Here are some additional important details:
- Your credit determines the size of the down payment—if you have good credit, it should be $0 down.
- Your first bill will be higher than all other bills, as stated in their terms and conditions.
- Depending on your credit, a down payment might be required.
- If you cancel your service before your device is paid off, the balance of your device will become immediately due.
- You have the option to pay down the remaining balance of your device sooner than your financing terms to achieve an even earlier upgrade.
- You have 14 days from the date of purchase to return your device for a refund—a restocking fee of $45 will be charged to your account.
|
AT&T
Value 2.0℠
$50.00/mo
+ $35 Upfront
|
|
AT&T
Extra 2.0℠
$70.00/mo
+ $35 Upfront
|
|
AT&T
Premium 2.0℠
$90.00/mo
+ $35 Upfront
|
Worried about your credit?
If you have poor—or no—credit history, there are still ways to get a new phone. Check out our guide to buying a phone without a credit check for more.
Verizon phone payment options
Verizon's device payment plan is pretty straightforward
- You have 36 months to pay off your device.
- You may upgrade early after at least 30 days and payment of at least 50% of the phone's cost.
Here are some important details:
- Depending on your credit, a down payment might be required.
- Your first bill will be higher than all subsequent bills, as stated in the terms and conditions
- If you cancel your service before your device is paid off, the balance of your device will become immediately due
- You DO NOT have the option to pay down the remaining balance of your device incrementally sooner than your financing terms to lower your monthly payment. You CAN pay off the rest of the device in one lump sum.
- You have 30 days from the date of purchase to return your device for a refund—a $50 restocking fee will apply.
|
Verizon
Unlimited Plus
$70.00/mo
+ Taxes & Fees. Price includes AutoPay & Paperless discount.
+ $40 Upfront
|
|
Verizon
Unlimited Ultimate
$85.00/mo
+ Taxes & Fees. Price includes AutoPay & Paperless discount.
+ $40 Upfront
|
|
Verizon
Unlimited Welcome
$55.00/mo
+ Taxes & Fees. Price includes AutoPay & Paperless discount.
+ $40 Upfront
|
T-Mobile's phone payment options and early upgrade plans
T-Mobile offers two phone financing options:
- A traditional finance-to-purchase installment plan
- A phone leasing financing plan
T-Mobile equipment installment plan
T-Mobile's installment plan is a 24-month equipment installment plan (EIP). With this option, you must pay off your device in full before upgrading.
For an additional $7 to $25 per month, you can enroll in T-Mobile's Protection 360 service, which includes their JUMP! early upgrade program. With JUMP!, you can upgrade after your device is paid down by 50%.
Additional details include:
Installment financing agreements and JUMP! early upgrades:
- Depending on your credit, a down payment might be required.
- Your first bill will be higher than all subsequent bills, as stated in their terms and conditions.
- If you cancel your service before your device is paid off, the balance of your device will become immediately due.
- You DO NOT have the option to incrementally pay down the remaining balance of your device sooner than your financing terms to lower your monthly payment.
- You have 14 days from the date of purchase to return your device for a refund; you will need to pay a $20-70 restocking fee.
T-Mobile phone leasing
T-Mobile also offers JUMP! On Demand, a leasing program that lets you upgrade your phone every 30 days. The terms are as follows:
- You will lease your device for an 18-month term.
- During your lease, you may upgrade your phone every 30 days.
- Once the 18-month lease is up, you may either purchase the phone in full; set up an installment plan; or trade in your phone and start a new lease.
Additional details of T-Mobile's JUMP! On Demand leasing program:
- You may not sign up for JUMP! On Demand online; you must either visit a T-Mobile store or call the carrier.
- There is no additional monthly fee for JUMP! On Demand—the leasing cost is determined by the cost of the phone.
- If you choose to trade in your device, you must turn it in at a T-Mobile store in person (you cannot mail it back to T-Mobile).
|
T-Mobile
Essentials Saver
$50.00/mo
with Auto-Pay - Taxes & Fees NOT included
|
|
T-Mobile
Experience More
$85.00/mo
with Auto-Pay + Taxes and fees
|
|
T-Mobile
Experience Beyond
$100.00/mo
with Auto-Pay + Taxes and fees
|
MVNO third-party financing
When you're working with an MVNO, you're less apt to get financing for your device(s) from the carriers themselves: after all, those companies are a lot smaller than the Big Three. There are a few, though, that offer leasing or financing options to pay off your device over time.
- One MVNO is Consumer Cellular, which offers an EasyPay device installment program that lets you pay down your phone over 24 months. It requires you to sign up for AutoPay to qualify.
- Another is Google Fi, which offers a 24-month financing option for most phones with no interest and no money down (though taxes are due upfront). Google Fi's financing terms mimic those of the Big Three outlined above.
- Optimum Mobile (formerly Altice Mobile) also allows you to purchase your phone for $0 down (though you must pay taxes in full) and pay it off over 36 months.
- CREDO Mobile offers a 24-month installment plan with the option to pay off the remaining cost of the phone at any time.
- Lastly, Straight Talk offers a leasing program called Smart Pay. Straight Talk offers leasing approvals up to $1,500, and monthly payment options range from 6 months to 24 months. You can buy out your lease at any time without early payment penalties.
For most MVNOs, you'll have to look at third-party financing companies that will work with your carrier to carry your loan. Affirm is one such company that has developed a relationship with specific carriers to help customers get the phones they want, at a low monthly price. Recently, PayPal has also entered the chat as a mobile financing partner.
MVNO device financing
Affirm and PayPal work with several mobile companies to create manageable installment plans for your devices. Their terms are pretty simple: Once approved, you have 3, 6, 12, or 24 months to pay off your device. Here are some of the companies that work with Affirm and/or PayPal to finance your phone:
- Visible
- Mint Mobile
- Cricket Wireless
- US Mobile
- H20 Wireless
- Twigby
- TracFone
- Ultra Mobile
- Total Wireless (formerly Total by Verizon)
If you choose to finance your device via a credit card, the key benefit here is that some companies will go as far as offering you an extended warranty and rewards for your purchase.
|
Visible
$25 Visible Plan
$25.00/mo
Taxes & Fees included
|
|
Mint Mobile
Unlimited Data Plan
$25.00/mo
$75.00 upfront payment for 3 months (equals to $25.00/month). Intro pricing for new customers only.
|
|
XFINITY Mobile
Mobile Select Plan
$0.00/mo
(for the first year of service) <br>Regular rate of $30/mo. thereafter
|
Should you finance a phone or buy it outright?
Pros of phone financing:
- Lower upfront cost
- Eligible for phone deals/discounts
- More affordable access to the latest technology
Cons of phone financing:
- Locked in for 2-3 years
- Often tied to the carrier's most expensive phone plans
- Requires an acceptable credit score
Financing a phone is often the only way to afford today's extremely expensive smartphones. Not many of us have thousands of disposable dollars lying around to pay for the latest iPhone or Galaxy phone outright. Paying it off in monthly chunks is a more manageable arrangement, and the down payment is often a fraction of the cost, if one is even required at all. Plus, many carriers tie their best phone deals to financing agreements—a common example is getting $1,000 off a new phone by purchasing it on monthly installments, with a monthly credit going toward your phone bill that will add up to $1,000 over two or three years.
Of course, you must remain with your carrier for that entire time to receive the full discount... and that's where we get into the biggest drawback of phone financing: Since carriers no longer require plan contracts, they often use financing agreements to lock you into their network long term instead. AT&T and Verizon both require a 3-year agreement, while T-Mobile's financing term is 2 years. If you decide to switch carriers within that time frame, you'll be responsible for paying the full remaining cost of your phone at that time. The same is true if you've taken advantage of a phone deal, and depending on the deal terms, your carrier could nullify the discount entirely, leaving you with a much larger bill than you initially counted on.
Phone deals with financing agreements are also typically tied to a carrier's most expensive phone plans. You may still be able to finance a device at full cost when signing up for a lesser plan, but to get the $1,000 off (for example), you need to sign up for the premium unlimited plan (and the average phone bill already hovers around $160/month).
You'll also be subject to a credit check, which will appear as a credit inquiry on your report and, depending on your credit, may disqualify you from financing the device altogether.
If you'd rather be free from any sort of phone contract, prefer a phone bill of under $100 per month, and/or don't want a credit check, purchasing a phone outright could be a better option for you.
Buying a new phone: FAQs
When is the best time to buy a new phone?
The best time to buy a new phone is either right when the phone is released—so you can take advantage of major discounts like trade-in offers or BOGO deals—or once the newer generation of models have been released, so you can get an older phone at a much-marked-down price.
How do I transfer everything from my old phone to my new phone?
To transfer your data from your old phone to your new phone, the best method is to back up your information either to the cloud or to your computer. Then, when you activate your new device, you can re-upload your data from that source. See our guide on how to back up an iPhone for more.
How do I finance a new phone?
You can finance a new phone by purchasing it on an installment plan and paying it down via monthly payments bundled into your phone bill, or by taking advantage of a leasing program that lets you pay a monthly fee and turn the phone in when your lease term is up.
What is the difference between financing and leasing a new phone?
The difference between financing and leasing a new phone is whether or not you own the device once your term is over. When you finance a phone via an installment plan, the device belongs to you after two or three years. When you lease a phone, the carrier still owns the device after your lease, and you can trade it in for a newer one (much like a vehicle leasing program). Depending on the carrier's leasing program, you may be able to buy out the remainder of the phone's cost in order to own the device.
Lauren Hannula
Managing Editor
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