How to acquire a smartphone with zero dollars upfront (Financing, subsidy and tab system explained)

How to acquire a smartphone with zero dollars upfront (Financing, subsidy and tab system explained)

Sometimes, getting something new provides great excitement. Smartphones occupy a great amount of space in our daily lives today. And sometimes, more than just a new gadget, we need a device that helps us get through our everyday challenges with fewer constraints. A real estate agent could use a device with a better camera to take better pictures while visiting homes and edit them to put the house in their best aspect. Maybe an advisor traveling all day long could use the latest technology in terms of battery capacity… However, investing in such tools by buying them upfront is not always possible. Thankfully, solutions exist to finance smartphones easily and a fewer cost than buying them with a credit card. In this article, we will look at different ways to acquire a smartphone with zero dollars upfront.

Before we dive into the details here, we’d like to bring to your attention that there a few things to consider before subscribing to a zero-dollar-phone plan. We explain these in another article and we invite you to read it for a more complete overview.

Financing:

In 2020, phone service providers introduced this new way to acquire a new phone. Today, you can buy a device directly from a carrier and finance it as you would do for a TV, a laptop or a car!

Unlike other goods, financing a smartphone usually doesn’t involve any interest rate. The carrier divides the price of the phone into a range of equal payments with 0% interest. On the most common basis, you will pay it off over a period of 2 years while the payment is added to the cost of your phone plan.

For example, let’s say the phone costs $1000 and your plan is $50 a month for 24 months. You will pay $41,67 every month for the phone, plus $50 for your plan. Then the total per month will be $91,67. At the end of the 24th month, payment will drop back at $41,67 every month and the smartphone will be all yours.

However, remember that phone carriers don’t make their livings on selling phones (unlike manufacturers). They make their money on phone plans and complimentary services and accessories. You can expect the plan will come up at a slightly higher price compared to a Bring-Your-Own-Device (BYOD) plan. In order to offer you the phone, the carrier has probably bought devices in bulks to a manufacturer and therefore there has to be a profit in some way.

Leasing:

Although this is a less popular option to acquire a smartphone with zero dollars, you can lease a smartphone as you would lease a car. The premium you pay every month gives you the right to use the phone while it belongs to the carrier. At the end of the agreement, if you wish to keep, you will have to pay a fee. Note that leasing is only available as an option on financing plans. Another thing to consider as a downside of leasing is that you don’t own the phone, it’s lent to you. Therefore, if anything happens like a broken screen or a bad splash, you will likely face a penalty payment to get it back up and running. Nevertheless, that option will still make sense for those upgrading frequently as carriers can be generous on trade-in values for returning customers.

Subsidies:

This offers the opportunity for a consumer to acquire a smartphone either with a fractional payment upfront or no money down. The price of the device is incorporated into the monthly fee. Thus the monthly fee for the plan will be different according to whether the consumer brought his own device or the phone plan includes a subsidy. It is important to note that this type of contract generally offers the biggest discounts on devices. However, unlike financing, the plans don’t readjust once the device has been paid off. You will have to pay attention to the end of your contract period and change plan by then. This way you will avoid continuing to pat the premium for the phone. Subsidized plans also allow you to acquire a smartphone at a lower price than when buying it upfront. This solution is less and less visible today as carriers will push towards financing.

Tabs:

Half-way between financing and subsidized contract, tabs tend to offer a big discount of devices. They also give the opportunity to a consumer to switch on a BYOD plan as soon as the device is paid off. The downside is that the contract is generally locked for 2 years. The consumer cannot upgrade or downgrade while on contract. Additionally, carriers can also raise the fee even while you are still on contract with them. To top it all, you would have to pay for the full price of the smartphone if you end the contract before the term. Not the discounted price. Note that this applies to tabs based plans as well as subsidized plans.

Wrappin’ it up!

Photo by Jakub Gorajek on Unsplash

There are different today by which you can acquire a smartphone with zero dollars. You should clearly now through these tools used by carriers. Hopefully, this will prevent you from becoming just a redeemable token source of income for the foreseeable 24 months. We hope you have found this article useful and thank you for reading.

If you would like to know which device to acquire next, visit our virtual purchase advisor and have a quick chat with our bot. Feel free to browse here for more tips on how to make the most out of your smartphone! We also like comments and to answer questions. So feel free to leave one if you wish!  

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