Carrier Dislike EIP and down payments

[eyoungren]

This is not entirely true. It works in your case because of the other deductions to reduce your overall tax... but for those who will end up owing large amounts using this method, the government will also add on an "underpayment penalty". The general rule is that an "underpayment penalty" is usually waived when the taxpayer owes less than $1000 or the taxpayer has paid (via withholding and/or estimated payments) 90% of the total taxes due. (source).

As with most tax situations, YMMV, but offering generic statements/advice like the one quoted above, it not a good idea... especially for one who is not a "tax professional".

Thanks, didn't realize that. I appreciate the clarification.

 

[aristobrat]

I still do believe they should give options at times... especially when someone’s down payment is $650 lol

Remember, when subsidized-contracts were around, they required a minimum credit score to qualify for. Not everyone qualified for them (and thus had no option to buy a $649+ smartphone for $199+).

Just saying, some folks not having good enough credit to get a smartphone for "cheap" upfront isn't something new that came about when the subsidized plans went away.

 

[AZhappyjack]

Remember, when subsidized-contracts were around, they required a minimum credit score to qualify for. Not everyone qualified for them (and thus had no option to buy a $649+ smartphone for $199+).

Just saying, some folks not having good enough credit to get a smartphone for "cheap" upfront isn't something new that came about when the subsidized plans went away.

Two points:

1. Nobody ever bought a $649 smartphone form a wireless provider for $199+. That was the up front (down payment) cost, as stated elsewhere in this thread.
2. Having a credit score/rating low enough to prevent one from getting that "deal" was caused by poor credit choices in the past - possibly even taking advantage of the 2-year contract subsidized phone purchase and not following through for any number of reasons.

 

[ftaok]

Two points:

1. Nobody ever bought a $649 smartphone form a wireless provider for $199+. That was the up front (down payment) cost, as stated elsewhere in this thread.
2. Having a credit score/rating low enough to prevent one from getting that "deal" was caused by poor credit choices in the past - possibly even taking advantage of the 2-year contract subsidized phone purchase and not following through for any number of reasons.

I believe aristobrat is referring to when subsidized was basically all you could get with the carriers. The carrier would give you a subsidy worth up to $450 when you signed up for a 2-year contract. My iPhone 5 was bought that way. I paid $200 to AT&T and signed a 2-year contract, which they let me out of when they began offering the MobileShare Plans.

Note - this is based on US carriers only. Not exactly sure how they did it in other countries and continents, but based on reading posts from our non-US members, subsidized plans weren't common.

 

[AZhappyjack]

I believe aristobrat is referring to when subsidized was basically all you could get with the carriers. The carrier would give you a subsidy worth up to $450 when you signed up for a 2-year contract. My iPhone 5 was bought that way. I paid $200 to AT&T and signed a 2-year contract, which they let me out of when they began offering the MobileShare Plans.

Note - this is based on US carriers only. Not exactly sure how they did it in other countries and continents, but based on reading posts from our non-US members, subsidized plans weren't common.

I get that... and did not mean to sound argumentative... but my point remains... the $450 subsidy was actually a loan, of sorts... the payment for which was built into the pricing structure for the wireless plan... and carriers had to check one's credit to determine their risk for the "loan"... and in some cases, security deposits were required for the less creditworthy.

And yes, this was how the US based carriers worked... and the carriers in other countries had different schemes/methods/plans. I know that for a while, Canadian carriers used a 3-year contract plan.

My real beef with these contracted plans was that the casual observer didn't realize the true cost of the phone. Many actually believed that the actual cost of the device was really only $199... That was part of the reason for the "sticker shock" when the original iPhone was prices at $600/unit.

 

[aristobrat]

Two points:

I don't disagree with either point, but FWIW I was replying to the OP's comment that it felt wrong that someone with a bad credit score would be told they would have to pay $650 down for a new smartphone (in regards to these new monthly payment plans).

 

[Tthomas612]

Remember, when subsidized-contracts were around, they required a minimum credit score to qualify for. Not everyone qualified for them (and thus had no option to buy a $649+ smartphone for $199+).

Just saying, some folks not having good enough credit to get a smartphone for "cheap" upfront isn't something new that came about when the subsidized plans went away.

Yeah this is true and thought about after posting on the fly.

No matter what they were paying a deposit before us the $199 for the phone plus there bill was more.

In the long run they were paying more...
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Two points:

1. Nobody ever bought a $649 smartphone form a wireless provider for $199+. That was the up front (down payment) cost, as stated elsewhere in this thread.
2. Having a credit score/rating low enough to prevent one from getting that "deal" was caused by poor credit choices in the past - possibly even taking advantage of the 2-year contract subsidized phone purchase and not following through for any number of reasons.

I think we all realize they didn’t pay $199 for the phone in total. We realize that it’s subsidized and the cost of the phone is spread out over a 2 year period...

I also realize these people made bad choices and that’s the reason why they’re paying $650 up front for a $750 phone...

I’m not disagreeing with anything anyone has said in this entire thread... I realize everything everyone has came up with. Very good points indeed. I just felt bad for the people because for $200 more they could’ve have bought both phones outright anyway, but as you’ve said it’s there choice...

It’s not like these people were upgrading from Galaxy S7’s ... they were upgrading from S3’s so it’s not like they’re going out every year and buying new phones...