Unless you live in a jurisdiction without sales tax, you’re paying a kind of interest each year that an outright purchaser pays only once.
I'm responsible for the full retail price of the phone whether i upgrade or not
If you don't have to turn it in and then pay off the balance, you are paying the same price as everyone else right?
Again, your OP speaks of paying 12 monthly lease payments, turning the phone in, and upgrading to a new phone with a new lease agreement with the option to own at the end of 24 payments etc. You are leasing your phone, seeing how you turn it in.
Can you explain the practical difference between what you do and a r
It’s not a down payment because the residual value is used to wipe out what you still owe toward the purchase price. If anything, it’s a down payment of $0 because you don’t reduce to cost of your next phone as an actual down payment would.
What’s the real world, practical difference (not label) of paying monthly for a term and then turning in the phone to offset the remaining balance, then doing the same thing again?
That’s similar to a car lease plan where you pay monthly over a fixed term and have the option to pay a fee at the end to own the car. The same with the iPhone you don’t legally own the device until you commit to buying it via the final fee. You are essentially renting a phone and not taking up the option to buy it.
From his OP, his lease to own agreement is 24 months. He has been paying 12 months and then turning the phone back in, in order to be able to upgrade under a new 24 month agreement. If he pays the 24 month payments, he will own the phone. He has been leasing under the title of a purchase agreement. Same thing with the Apple program. Most of the people are doing nothing more than leasing a phone every year. There are very few who fulfill the terms of the agreement whereby they become owner of the phone.
You don’t get the value of the phone to purchase another phone, though. The residual value of your old phone pays off the balance of your old phone. You get $0 towards your next purchase. And you get to pay 6%, or whatever your sales tax rate is, so you lose the time value of money argument, too.
Which, again, is financially and practically indistinguishable from a lease under the scenario you’ve laid out. Except you get to pay sales tax every year for the privilege.
Resale is almost always more than half the full price which puts buying and selling outright a smarter choice if you want a new phone every year.
