Things to Consider When Financing Your Mobile Phone
A few weeks ago, Apple launched its best iPhone yet, at least according to the brand’s CEO. The iPhone 7 and iPhone 7 Plus were unveiled in September and the phones have no phone jack. It’s thinner and sleeker than ever but you can’t plug in your earphones through the charging port while charging your mobile phone. Regardless, millions have already lined up to buy the latest iPhone. Some of them opted to avail a contract phone and others through a mobile phone financing deal.
If you are planning to follow others and opt for mobile phone financing, there are a few things to consider before you close and sign any deal. Here are some things to keep in mind when shopping for mobile phone financing:
Most providers offering mobile phone financing will usually run credit checks on their applicants. If you have good credit, chances are high that your application will get approved fast and without hassles. You can also enjoy great freedom with your smartphone choice if your credit rating is stellar. On one hand, having bad credit may mean low chances of approval. You can still get approved for a phone financing scheme but your mobile phone choices may be limited.
You also have to consider smartphone cost. You may want to buy the latest iPhone or Samsung Galaxy phone. Because these phones are on the high-end range, the cost will be pretty steep. If you have good credit and high monthly income, chances of getting the phone that you want are high. If you have bad credit and you want an iPhone 7, approval for your application is less likely. When deciding on which smartphone to buy on finance, you need to consider the phone’s cost in relation to your credit rating and your monthly income.
In addition to your smartphone’s cost, repayment terms are another factor to consider. Most financing plans can be repaid over a 12-month or 24-month period. Most providers will give you a financing deal at 0% APR if you have excellent credit rating. If you want a longer repayment term like a 36-month period, for example, you should expect for a deal at APRs around 10 to 15%.
With mobile phone financing, you’ll usually pay more than the cost of your smartphone. For financing providers to earn money, they charge a certain interest to your financing plan. If the starting cost for iPhone 7 is £599 and you want to buy one on a financing plan, expect to pay more than the phone’s original cost by the end of your contract term. In general, the longer your repayment term is, the lower your monthly instalments but you’ll also pay more for your smartphone in the end.
Penalties and Other Charges
In addition to existing interest rates, financing providers also add penalties and other hidden fees. If you miss or delay a payment, for example, you’ll incur penalties added on top of your current monthly bill. If you’re a responsible person, on one hand, and you never miss a payment, you can enjoy the buy now, pay later scheme at zero interest. As long as you pay your balance in full before the end of the deferred period, you have nothing to worry about.