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Other Do you think 24 month financing on phones is detrimental to people?

I think a payment plan can be an enticement to someone to extend themselves financially for 2 years. It is easy to get caught up in the hype that comes along with every new iPhone release and logic for alot of folks goes out the window. A $1000+ new phone seems fine at $50/mo.
"Yeah, I can handle an extra $50 a month added onto my bill no problem". They see the "now" picture and not the much "bigger" picture that is the long term reality. 24 Months of extra payments is alot and seems to last forever, long after that "new phone" smell wears off, and those who trade in after a year or so just continually lose money in a seemingly never ending cycle. But being in constant debt seems to be an acceptable thing these days. Car and mortgage debt can be a neccessary evil but always having the latest phone is definitely not. Just my 2 cents
 
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poorcody said:
Consumer Reports did a detailed analysis on this many years ago... they found the most economical thing to do (i.e. spend the least amount of money) was to buy a high reliability car new, and keep it as long as possible (ideally over 10 years).
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This is what I’ve done and now onto the second car. In both cases though I bought nearly new (8 months old, low mileage). This knocked £7000 off the price of the second one vs what it would have cost to order it brand new to spec.

I think many people go into car buying focusing entirely on how much will debit their bank account each month, without any consideration for the overall cost of what they’re doing.
 
cbreze said:
I think a payment plan can be an enticement to someone to extend themselves financially for 2 years. It is easy to get caught up in the hype that comes along with every new iPhone release and logic for alot of folks goes out the window. A $1000+ new phone seems fine at $50/mo.
"Yeah, I can handle an extra $50 a month added onto my bill no problem". They see the "now" picture and not the much "bigger" picture that is the long term reality. 24 Months of extra payments is alot and seems to last forever, long after that "new phone" smell wears off, and those who trade in after a year or so just continually lose money in a seemingly never ending cycle. But being in constant debt seems to be an acceptable thing these days. Car and mortgage debt can be a neccessary evil but always having the latest phone is definitely not. Just my 2 cents
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Agree. There are a lot of reasons why it may be advantageous to buy a new phone on the $50/mo plan as described here in many posts. Because it's the only way I can buy a $1000 phone however, may not be one of them.
 
Ffosse said:
Surely most people keep 6 months salary as savings?
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It's not anywhere close to "most" in the US. Those of us who do think that far ahead and have such an emergency fund are rare. I don't remember exact numbers but articles I've read estimate that a large portion of adults in this country don't even have 1 month's worth of savings with a decent portion of that having exactly 0 in savings. I know several people who think my wife and I are nuts for having so much in savings whereas I'm thinking "hmm, maybe I should bump it up to 9 months worth", lol.

This is one reason I buy all luxury items in cash and without having to dip into my emergency fund. I don't want my emergency savings going towards stuff like this if I lost my job.
 
I think it is subjective to purchaser who may have the means to justify having something now with much lower monthly installment but can't afford or willing to pay the full price at the moment. Financing is just like credit cards, use it responsibly and have a stable financial ability to ensure item is paid off during its term. For companies, financing make it easier and affordable for consumers to make larger purchases yet companies can secure that payment as "credit".

I do finance my Apple purchase via credit card because 1. I earn points to get rewards, 2. Revolving credit adds to my credit history and build credit score, 3. yearly upgrade cycle if done via Apple financing. I feel I can resell my used Apple product for a little more than the actual value after a year or if it decides to keep it for a full 2 years. So financing more purchases than one can handle, I think that would be a detrimental when the debts pile up. Then again, everything in life is detrimental if you misuse or overuse or overeat anything and mild/moderation is key.
 
vertical smile said:
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.
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How much are we talking about opportunity cost wise? If you could have made $15 over the life of paying off the phone vs buying it cash outright, is it worth the hassle and time?

With the benefit of hindsight, paying off my house and cars early turned out to cost me money. I paid off house early, treating the 5.75% interest rate on the loan as a "safe" earnings equivalent. Savings accounts were paying much less, but this was after the financial crisis, paid off around 2011. If I had known how the stock market would do over the next 7 years, it would have been better to put the money in stock funds. Or, even better, in Amazon and Netflix in particular :)

And if financing the phone at 0% makes more money available to pay off a credit card at 20%, or make extra payments on a 6% car loan, that would be better.
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vertical smile said:
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.
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Another option I think someone mentioned. If your credit history is short, making regular installment payments on time can in theory help. That may depend on where you finance it, ATT doesn't appear to report anything on at least 2 of the credit reporting agencies (other than the hard inquiry when I signed up). Maybe if buy direct from Apple that one gets reported. Companies that only report late payments, etc, don't help much.
 
Danoc said:
No, smartphones have become major appliances, equivalent to fridges or cars for some people. Financing a high end smartphone is not ridiculous, this is XXIst century. Make it useful and spend wisely.
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I think you make an interesting point, and it shows how times have changed with how certain things are financed. Ten years ago, smart phones weren’t nearly as expensive as they are today and it wasn’t uncommon where consumers were paying in full for a smart phone that cost approximately $450/$500. But with the rising cost of smart phones over the years, the average consumer even if they have the money, likely does not want to spend $1100 on a smart phone when they can pay it off incrementally with 0% interest. And in today’s market, We are also seeing a trend where consumers are not upgrading as often either with devices, being how much they can do and it’s expensive to upgrade annually for those not on an upgrade program.
 
Danoc said:
No, smartphones have become major appliances, equivalent to fridges or cars for some people. Financing a high end smartphone is not ridiculous, this is XXIst century. Make it useful and spend wisely.
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I agree, it seems like a smartphone nowadays are more of a necessity, I can't imagine if this was the 80s(when I was born) being on a road broken down, without a phone you may spend hours waiting for someone to just drive by, depending on area, now that we have apps that can have AAA come and get your car is a great thing.

I see the downside to smartphones and smart devices when it comes to kids, but for adults, it seems like it's needed nowadays, just my opinion.
 
JUCJ85 said:
it seems like a smartphone nowadays are more of a necessity
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Sure but nobody needs a top of the line $1,000 smartphone. I have no problem with folks spending money on luxury items they want but folks shouldn't confuse "want" with "need". It's like my brother-in-law who leases a $50k pickup truck because he "needs a truck" (he doesn't).

That's one of the reasons I prefer to pay for things outright. It really makes you think about whether or not you really need it and how much you want it.
 
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Danoc said:
No, smartphones have become major appliances, equivalent to fridges or cars for some people. Financing a high end smartphone is not ridiculous, this is XXIst century. Make it useful and spend wisely.
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The big difference is when they release the next model of fridge or car most users don't automatically 'upgrade'. For some reason a lot of people think they 'need' this year's phone.

If Apple announced an X2 tomorrow, said you could order it, gave no tech information and priced it at $1200, many (a lot on here) would order immediately.
 
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russelljg said:
The big difference is when they release the next model of fridge or car most users don't automatically 'upgrade'. For some reason a lot of people think they 'need' this year's phone.

If Apple announced an X2 tomorrow, said you could order it, gave no tech information and priced it at $1200, many (a lot on here) would order immediately.
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Agree, phones these days are pretty much topped out anyway as far as new innovations anymore. Among my friends only the techie types even care about the next latest thing and the rest which is 90% of them keep phones till they no longer work which makes perfect sense to them. These days I feel I can keep my devices alot longer than in previous years. The X while somewhat innovative still is running the same old OS in a little different package. Not worth the price of admission for most people. If Apple would loosen some of the restrictions regarding customizations they might sell more phones at that higher pricepoint. Maybe ....?
 
Apple fanboy said:
Nope. I hate paying for things monthly and will actively seek an option that doesn't involve a monthly subscription.
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That’s not always a _feasible_ solution either (or) relevant either to the subject. You can actively search all you want, but sometimes it requires to have a monthly option or subscription given the requirements or agreement when you opt to pay for something. You don’t always have options on every consideration depending on the purchase.
 
Relentless Power said:
That’s not always a _feasible_ solution either (or) relevant either to the subject. You can actively search all you want, but sometimes it requires to have a monthly option or subscription given the requirements or agreement when you opt to pay for something. You don’t always have options on every consideration depending on the purchase.
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Yes I'm aware. I pay for my phone contract
And my internet package. Everything else is paid in a lump sum.
 
Ffosse said:
Surely most people keep 6 months salary as savings? That's what I've always done and it allows me to make outright purchases.
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Nowhere close.

But that isn’t necessarily a sign of reckless people. House market in the UK is such that most people, if they can manage to save half their annual salary, have it swallowed whole by the deposit on their first home and the costs of completing a purchase. Cost of living in relation to income is high so very few people can save at that level. I settle for putting 20% of my monthly net pay into savings.
 
It makes financial sense to spread the payments but I have to admit, the other month when I was doing a personal finance review, that it hit me that I spent £750 on an iPhone 7 128 in 2016).

I mean... it’s just a phone. You can buy a decent (kinda) second hand car for that amount!
 
bluecoast said:
It makes financial sense to spread the payments but I have to admit, the other month when I was doing a personal finance review, that it hit me that I spent £750 on an iPhone 7 128 in 2016).

I mean... it’s just a phone. You can buy a decent (kinda) second hand car for that amount!
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Except it's not just a phone.
 
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