Other Apple iPhone Upgrade Program - Economic Sweet Spot

[newellj]

A friend bought an iPhone 8 on the Apple IUP and has had it nearly two years - so the loan is within a few months of being fully paid.

Looking at the terms, it seems to me that the sweet spot for value on the IUP is probably around the one-year mark, at which point you can basically turn the phone back to Apple for no charge and get 50% of the loan forgiven.

As you get closer to the two-year term of the loan and have paid off much more of the phone, turning the phone back to Apple effectively results in getting the benefit of only the remaining loan balance. At that point it seems better to pay off the loan and either sell the phone privately or perhaps trade it to Apple for a new phone, depending on how you balance the effort and potential risk of a private sale vs. the predictability but lower value of an Apple trade-in.

Is this right, or am I misunderstanding how the IUP works?

 

[4sallypat]

Yes this is correct.

I feel the same way - if you want the newest model every year, then trading it in after 12 months of payments yields you a new model and you repeat...
However if you pay it off in 24 months then it's better to sell it privately where you get the most out of the phone and buy a new phone be entering the program new.

I wonder if Apple will be offering the upgrade program this year with the new iPhone thru Citizen's Bank or if they will use the Apple card to springboard more customers into signing up for the new card and offer the same upgrade or 0% financing ?

My work phone is still a 7+ which I still love and works perfect that I got thru Barclay's Apple Rewards promotion (0% for 24 months, $50 Apple gift card, and a VISA card).

If the new iPhone XI is having a similar offer for Apple Card users, then sign me up!

 

[majurg]

A friend bought an iPhone 8 on the Apple IUP and has had it nearly two years - so the loan is within a few months of being fully paid.

Looking at the terms, it seems to me that the sweet spot for value on the IUP is probably around the one-year mark, at which point you can basically turn the phone back to Apple for no charge and get 50% of the loan forgiven.

As you get closer to the two-year term of the loan and have paid off much more of the phone, turning the phone back to Apple effectively results in getting the benefit of only the remaining loan balance. At that point it seems better to pay off the loan and either sell the phone privately or perhaps trade it to Apple for a new phone, depending on how you balance the effort and potential risk of a private sale vs. the predictability but lower value of an Apple trade-in.

Is this right, or am I misunderstanding how the IUP works?

No, the sweet spot (monetarily) is paying the phone off in two years without interest. Then you own the device outright and can do what you will with it.

If you trade in after 1 year, you effectively are paying the loan for a year without ever owning the phone.

 

[4sallypat]

That's correct, but some people gotta have the latest model.
It's like a car lease - you get a brand new model every few years....
Constantly in debt and nothing to show for it....

For those that paid it off with no interest, that's the best scenario.
I own my 7+ and can sell it on eBay for a lot more than what the Apple trade in is offering.

Just want to know if Apple will be doing the same promotion for this upcoming XI phone - I would again jump on it like I did with my 7+ and Barclay's Reward Apple card....

 

[newellj]

No, the sweet spot (monetarily) is paying the phone off in two years without interest. Then you own the device outright and can do what you will with it.

If you trade in after 1 year, you effectively are paying the loan for a year without ever owning the phone.

But if you pay the loan off for the full two years, you should have done the 0% loan instead, unless you really wanted Apple Care+. If you keep the phone for two years, there's no reason to buy with the IUP...as far as I can tell.

I think your second point is right - so, to make the IUP economically attractive, you actually have to stay in the program forever. And when you decide to bail, then paying the loan through the end of the two year term would be the most sensible, for the reasons you mention.
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That's correct, but some people gotta have the latest model.
It's like a car lease - you get a brand new model every few years....
Constantly in debt and nothing to show for it....

For those that paid it off with no interest, that's the best scenario.
I own my 7+ and can sell it on eBay for a lot more than what the Apple trade in is offering.

Just want to know if Apple will be doing the same promotion for this upcoming XI phone - I would again jump on it like I did with my 7+ and Barclay's Reward Apple card....

Possibly a minor point, but I've been on eBay since 1998 and I've had enough experiences with dishonest buyers (it only takes a few) that I wouldn't sell electronics on eBay any more. If I'm going to sell them myself, I sell on Craigslist and accept a (usually) lower price for lower risk. All of my iPads and MacBooks have been sold on Craigslist for quite a few years now and I've had no problems at all. Another YMMV, though.

 

[4sallypat]

Possibly a minor point, but I've been on eBay since 1998 and I've had enough experiences with dishonest buyers (it only takes a few) that I wouldn't sell electronics on eBay any more. If I'm going to sell them myself, I sell on Craigslist and accept a (usually) lower price for lower risk. All of my iPads and MacBooks have been sold on Craigslist for quite a few years now and I've had no problems at all. Another YMMV, though.

Same here, been an eBay member since 1999. I prefer to buy and sell iPhones from eBay - they will protect you in case the device is locked, bad ESN, jailbroken, or reported lost/stolen. eBay will get you back the money if the seller is dishonest in a heartbeat!

I had a bad case on Craigslist when I helped get an iPhone for a friend, paid cash, activated on a carrier and that seller turned around and reported it stolen the day after, causing the phone to stop working and to add insult to injury - the seller got cash back from the insurance company.
Took awhile to get the seller back to refund - had to file a police report for insurance fraud.