My husband surprised me at Christmas and bought me an iphone X on Apple IUP. I just wish when we have the extra money I could make another payment.
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Other Do you think 24 month financing on phones is detrimental to people?
- Thread starter tonybarnaby
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It’s a very outdated view that if you can’t afford to pay cash and buy outright you can’t afford it. It’s about making a choice between delaying the purchase to save for it or accepting the cost of the finance to have it now and pay monthly. If 0% finance is available to you, there’s no reason not to go down the finance road as it amounts to the same thing except you get it now, not later.
For somebody who is sensible with their monthly budgeting and is prepared and/or able to shop around for the lowest cost way of achieving their purchase, finance is a good thing. I couldn’t afford to pay £300,000 upfront for my house, but that doesn’t mean I can’t afford to buy it. That’s what mortgages are for.
It only becomes a problem if people are reckless and take on more finance commitments than they can service from their income.
Or if they lose their income of course.
I realise living within your means is an outdated view, but it doesn't make it wrong.
I'm not saying there is anything wrong with getting second hand. But the prices Macs go for, the prices iPhones go for I'd have to save longer than 3 years. We live paycheck to paycheck and there is always something else with a higher priority that money goes to.
By that time, second hand often means abused, or worn out. And if I am still paying that price in 5 years or more than it damn well better have been bought new, stored and never used.
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Except if debt, such as credit or a lease, are structured in such a way as to be paid over time.
If I never went into debt to get something - I'd rarely have anything.
So make sure you have critical illness / income protection cover and keep a buffer in savings where possible. Yeah, you could be made redundant but that’s usually a very short-term thing and creditors will work with you and be flexible providing you let them know as soon as possible. I’m talking in the UK here - I realise job security is very different in other countries.
I'm also in the UK. I have 2-3 years salary in savings so I think I'm ok.
When I was made redundant I was only out of work a few weeks. Given I'd been in my previous position 10 years, I did very well out of it.
But the fact that I was living debt free meant I had no sleepless nights over it.
im beginning to wonder if being 10 years out of date would be a good thing.... I think the problem is people buy the newer shiner things when the thing they have hasn't even been used to its full capacity for long. Vehicles are one thing that I feel people turn over way too fast. Phones are #2.
(i have one phone on the upgrade program and the other is paid for. whenever i get that $45 charge to my card I think dang this is dumb) --the phone i speak of is my wives BTW i do not carry two
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I happen to agree however im on the buy a vehicle with cash side.... (the vehicle has to be carefully considered of course and within the cash budget)
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now i officially realize why people are so far in debt........ How old are you?
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It’s detrimental in that it helps normalise obscene pricing strategies because it’s an easier pill to swallow when you’re paying £40-50 per month for a phone instead of the £999+ it actually costs.
Take away 0% financing and leave people with the option to either buy outright or get shafted by network contracts, and sales would drop.
Take away 0% financing and leave people with the option to either buy outright or get shafted by network contracts, and sales would drop.
It all comes down to priorities. If I had £600 or £700 set aside to buy a mobile phone I likely wouldn’t buy it. I’d use the money for something more practical like some time away with my daughters. The fact £30 a month goes out with the rest of my bills means it’s just another outgoing for me. I don’t have a need to replace a phone every 12 months like some people do, I’d get very bored of doing that.
Paying monthly doesn’t mean you can’t afford it, it’s just a long winded method of paying. I don’t understand why some people don’t get this.
Paying monthly doesn’t mean you can’t afford it, it’s just a long winded method of paying. I don’t understand why some people don’t get this.
All too often people buy what they can’t afford and it’s not smart. Payment plans don’t help those people, they hurt them.
Unless you are financing through Apple (and doesn't that then include applecare+?) you have just made it more difficult to change carriers if your needs change. All for, approximately, $15/phone over 2 years if you make 1.5% on it.
Also, you generally can't finance if are on a prepaid plan, and you can't unlock if you owe money on it (useful for the small % who may want to travel out of the country during this time).
[doublepost=1523829831][/doublepost]If you have $1000 in cash sitting in a savings account, and that is ALL your spare cash, a steady income that can handle the payments, you could consider that, if you are getting the phone anyway, the financing may be a better deal. You still have $1000 for emergencies (plumbing emergency, car emergency), that you can pay to repair. If spent the cash, then the options are to attempt to borrow from family, skip some other bill, charge on credit card at 20%, etc.
People hopefully make the correct informed decision, balance wants and needs, etc. I've been there where I had to plan credit card payments around paydays. Luckily, I'm past that, but need to do better with unnecessary purchases in the future. You never know when you may be between jobs.
I agree with the OP. Cars and homes are the only things I finance, even when I can afford to pay cash for them (because I'm better off financially by investing my money and making payments). Luxury items, toys, phones, tablets, computers, etc are always paid in full upfront. More specifically, I always use a credit card, to get the cash back rewards, and always pay the statement balance every month so I never pay interest.
You never get ahead in life if you finance everything. Yes, I realize it's a 0% loan but paying for it up front makes the cost more real and causes me to really think if I'm making the best use of my money. This is why I had a iPhone 5S for 4.5 years. Sure, $30-$50 a month isn't much but paying $700+ out of pocket makes me really ask myself "do I really need a new phone now?". I could use the same logic I use for cars/homes and say that I'd be better off investing that money and making payments on a 0% loan but I don't like doing that for luxury items because I want my savings to only have to go to necessities if I ever lose my job.
The other thing I don't like about things like the Apple iPhone Upgrade Program is that it's easy to fall into the trap of only ever renting your phones. If you're upgrading every 1 or 2 years, you're always in this mode of making payments which is basically like renting your devices forever. It's like always leasing cars or trading in and buying another one as soon as your loan is paid off. You never really own anything if you always do that.
In short, unless it's a car or a house, if you can't pay cash for it, you can't afford it... and that's after having 3 - 9 months worth of savings, putting money aside for retirement every month (ideally the max allowed), etc.
You never get ahead in life if you finance everything. Yes, I realize it's a 0% loan but paying for it up front makes the cost more real and causes me to really think if I'm making the best use of my money. This is why I had a iPhone 5S for 4.5 years. Sure, $30-$50 a month isn't much but paying $700+ out of pocket makes me really ask myself "do I really need a new phone now?". I could use the same logic I use for cars/homes and say that I'd be better off investing that money and making payments on a 0% loan but I don't like doing that for luxury items because I want my savings to only have to go to necessities if I ever lose my job.
The other thing I don't like about things like the Apple iPhone Upgrade Program is that it's easy to fall into the trap of only ever renting your phones. If you're upgrading every 1 or 2 years, you're always in this mode of making payments which is basically like renting your devices forever. It's like always leasing cars or trading in and buying another one as soon as your loan is paid off. You never really own anything if you always do that.
In short, unless it's a car or a house, if you can't pay cash for it, you can't afford it... and that's after having 3 - 9 months worth of savings, putting money aside for retirement every month (ideally the max allowed), etc.
Though I financed a few phones through T-Mobile and paid them off after a few months, I have pretty much gone the factory unlocked route and will continue to do this. It started with the 6S+, then with a S7 Edge, S8+ and now my 8+.
I still use my 6S+, S7 Edge and my 8+ is my daily. I sold the S8+ back in February.
I still use my 6S+, S7 Edge and my 8+ is my daily. I sold the S8+ back in February.
What I read from the OP is lots of opinions about what’s other people should do with their money. How about, do that makes sense for your financial situation? And don’t worry about what others do. Americans in general are bad financial planners, but that is what it is.
Personally, I wouldn’t pay upfront for something that I can have for a zero percent interest loan. That said, I am a grown up who knows exactly how much her phone costs. I can make big girl decisions and don’t have to consult with internet folk about what is best for me. I know that the price of the X is about the maximum of what I think a phone should cost. But that cost is too much for some and a higher cost is acceptable for others.
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But your thoughts don’t pertain to everyone. I put down 20 percent on my house and could have done more and put in a backyard afterward too. I can pay cash for my phones but I wouldn’t with zero percent interest. Does that mean my finances will always be this way. No. My husband or I could become disabled at some point and unable to work etc, but I can’t base my life in total fear that way. I would rather hold on to my cash though. That’s why we only did 20 percent down on our house and why hubby hasn’t paid off his student loans. The interest is so low we are better off investing the money.
Personally, I wouldn’t pay upfront for something that I can have for a zero percent interest loan. That said, I am a grown up who knows exactly how much her phone costs. I can make big girl decisions and don’t have to consult with internet folk about what is best for me. I know that the price of the X is about the maximum of what I think a phone should cost. But that cost is too much for some and a higher cost is acceptable for others.
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But your thoughts don’t pertain to everyone. I put down 20 percent on my house and could have done more and put in a backyard afterward too. I can pay cash for my phones but I wouldn’t with zero percent interest. Does that mean my finances will always be this way. No. My husband or I could become disabled at some point and unable to work etc, but I can’t base my life in total fear that way. I would rather hold on to my cash though. That’s why we only did 20 percent down on our house and why hubby hasn’t paid off his student loans. The interest is so low we are better off investing the money.
What I generally do is to sign up for the NEXT program with AT&T, and then while making the payments on the iPhone, also am tucking aside an equivalent amount of money separately so that before the first year of the NEXT contract is up I have the option to pay off the phone right then and there, which then gives me much more flexibility in deciding whether or not to keep it or sell it or trade it in at the Apple store for the newest iPhone when it becomes available. This actually has worked out very well for me.
That said, for the heck of it, this past year I tried going through the NEXT program all the way, including having to send in my iPhone 7 Plus once I had purchased the iPhone X, and it was such a hassle and more than a little stressful so I decided never again, and have gone back to my practice of setting aside money to pay for the phone in full and fulfill the contract before I'm ready to buy a new iPhone.....
Since I know that the first-generation iPhone X is not going to continue to be sold by Apple once the new iPhones are announced and available, I am definitely planning on keeping mine, so she'll always be in the household alongside the very first iPhone.....that seems fitting, somehow. So I'll sign up for a NEXT program for whatever the new iPhone is and continue on from there....while also setting aside funds to give myself flexibility when the time once again comes for another changeover in iPhones.....
That said, for the heck of it, this past year I tried going through the NEXT program all the way, including having to send in my iPhone 7 Plus once I had purchased the iPhone X, and it was such a hassle and more than a little stressful so I decided never again, and have gone back to my practice of setting aside money to pay for the phone in full and fulfill the contract before I'm ready to buy a new iPhone.....
Since I know that the first-generation iPhone X is not going to continue to be sold by Apple once the new iPhones are announced and available, I am definitely planning on keeping mine, so she'll always be in the household alongside the very first iPhone.....that seems fitting, somehow. So I'll sign up for a NEXT program for whatever the new iPhone is and continue on from there....while also setting aside funds to give myself flexibility when the time once again comes for another changeover in iPhones.....
I’m not taking away your opinion, but understand that’s a generalization, not a fact. There are multiple examples of where somebody could pay for something in full, but the conveniences are there where the consumer pays something off over the course of time because that’s what works best for their situation. It doesn’t have to be just smart phones, it could be a multitude of things. But in order to justify how somebody pays something off or what they can pay in full, it’s dependent on their financial situation. But also in terms of credit building, payment plans are not always considered negative when it helps with future purchases well.
Why are vehicles the exception? There are plenty of decent, affordable cars which can be purchased with cash
Such an excellent write up and advice. Very wise. Thank you for sharing. Your remark is totally true and hit on.
Not knocking your ideas on finance, but for me if i can't afford to pay cash for something i don't buy it. period.
Exactly. Given the cost of the parts of an iPhone vs. the cost that is regularly reported on this site, I would think that the iPhone would be several generations ago in development if consumers did not want the "latest and greatest" and willing to finance it.
.....or, maybe not, if Apple had to waited to build that enormous and enormously expensive "spaceship" campus for a few years instead ..........
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While I cannot afford a $475 dinner; our monthly food budget is less than that
; I wholeheartedly agree about the Barclay 0% financing. Over the years, we have purchased 3 MacBook Pros and 1 27" iMac using Barclay's financing. It is so easy to just divide the total by one less than the number of months financed....bank autopay......and done. No interest, no large outlay of cash from savings, no stress.
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If there was a choice between free/deferred financing, and paying the same amount in cash, paying cash would be idiotic from a financial perspective.
Exactly. Given the cost of the parts of an iPhone vs. the cost that is regularly reported on this site, I would think that the iPhone would be several generations ago in development if consumers did not want the "latest and greatest" and willing to finance it.
.....or, maybe not, if Apple had to waited to build that enormous and enormously expensive "spaceship" campus for a few years instead ..........
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While I cannot afford a $475 dinner; our monthly food budget is less than that
The $475 dinner point is we chose how to spend out money and when.
This thread to me apeaks volumes of a lot of social issues. Some people abuse it so maybe it’s not a good idea.
Yet on another topic, a newly graduated college grad mentioned he didn’t know how to balance/reconcile a checkbook.
Interesting.
On one hand people think some people should have been he expensive iPhone because they “can’t” afford it but yet people are entering into the working society without basic financial skills.
Where does the problem lie
I buy my phones upfront now but really don't see much difference between the NEXT plan and how most of us purchased phones a few years ago when they were subsidized. You signed a 2 year contract with a carrier which included a subsidized phone and a steep penalty for dropping out early. You didn't really "own" those phones either until the contract was fulfilled.
I choose the iPhone upgrade plan for the flexibility of essentially paying for half the phone.
The IUP is a loan. What you do with the phone is up to you, you still owe on the loan.
If you choose to upgrade your phone may be worth more as a trade in than simply giving it back.
If you choose to hand it down you still owe the rest of the loan but doesn’t prevent you from opening a new loan (credit dependent).