Should You Lease Or Buy Your Smartphone: Everything You Need To Know
Investing in the latest smartphone does not have to cost a lot of money upfront thanks to leasing options. Not having to buy the a phone outright lowers monthly payments in a way that fits more budgets. And of course, leasing is the best way to upgrade a phone when the new phone models are released year after year. Not everyone wants to be tied to their phone for a years-long contract. When consumers commit to a lease, they commit to a monthly payment and specific upgrade plan. Different carriers have different lease agreements. Phone companies love leases because it promises a steady cash flow and fewer phone purchases, which raises profits. Of course, like any investment, it is important to weigh the pros and cons of leasing, different agreements and what they offer. The following guide can help you if you are thinking about leasing your next smartphone.
Guide to Leasing a Smartphone
Leasing Versus Equipment Installment Plans (EIP)
Ownership is the biggest difference between leasing agreements and equipment installment plans (EIPs). EIPs usually involve a two-year contract and buying a phone either all at once or via monthly installments. Once the phone is paid off, the phone is then owned by the user. Leasing is different. Consumers sign an agreement that gives them a phone to use for a certain amount of time, with upgrade options. All the person has to do is pay the monthly rate, which is lower than EIPs, and they can have new phones and a cheaper plan. There are pros and cons to both plans. For example, the biggest benefit of EIPs is that you own the phone once the contract and payment is over. You can then trade it in, sell it and do just about anything you want with the model. With leasing, a person has a lower monthly payment and more opportunities to upgrade, but they never own the phone.
Cost for Leases
A phone bill is not always cheap, especially when you add the cost of a phone onto it. One of the main reasons consumers invest in leases for their phones is that they can end up saving a lot of money. Carriers have brought down the cost of leasing versus EIPs because they save when the user does not buy the phone and returns it. Consequently, EIP tends are higher because consumers are working towards ownership. to The savings can be pretty huge, especially for anyone with a tight budget or who is looking ahead. For example, leasing a phone model could cost $25 per month whereas actually trying to own the same pone could cost $31 or more. This adds up over time. Consumers can find even bigger savings when they bring in older models to trade in before starting a lease. People looking for the best monthly rates will enjoy leasing agreements.
Upgrade Quicker and Easier Thanks to Leases
Regular and easy upgrade opportunities on phones is one of the main pros to leasing versus owning a phone. New models come out every year from a wide range of manufacturers. Consumers love experimenting with such new features as enhanced cameras, increased speed and more. People who have fun with new phone models and technology will not want to wait before upgrading, which can happen with traditional contracts. With many lease agreements, consumers can upgrade once a year or after 12 payments. T-Mobile even lets people upgrade three times a year if they really want to. Apple enthusiasts know that the company tends to release new phones every year or two. Having the flexibility and capability of grabbing the latest iPhone is alluring. Lease agreements are built around letting people trade in old models for new ones without any hassle.
Balance What Different Companies and Carriers Have to Offer
Different phone carriers and businesses offer different plans and options. You should think about the different agreements' features and how they fit your life before choosing any one plan. For example, Apple is a vendor that offers phone leasing and T-Mobile and Sprint offer leasing opportunities in addition to the pay to own installment plans. Read more about Sprint lease. As popularity increases, more and more carriers are thinking about offering different leasing plans. Because leasing has become more and more popular, carriers like Sprint have gotten creative about their programs. For example, Sprint has their iPhone for Life program because so many people decided to lease their models. People love to know how much they owe on a phone and love the flexibility of upgrading.
Understanding What Happens at the End of the Agreement
At the end of a lease, you can trade the phone in for another device. In some agreements, like Spint’s iPhone Forever contract, you can upgrade after 12 payments. However, the customer does not own the phone at the end of the agreement. In an EIP or traditional plan, once the device is paid for, the user owns the model and can sell it or trade it in whenever they want to. A lease means that consumers continue to pay on their phone through the end of the agreement and then trade that model in for another.
It is important to compare lease agreements and carriers to see what the leasing period looks like and when upgrades can happen. For example, T-Mobile’s Jump On Demand allows people to upgrade their phone model up to three times a year and the lease agreement lasts for 19 months whereas Apple’s iPhone Upgrade contract has a lease period of 24 months, with a new model after 12 payments.
Compare Carriers' Networks and Offerings
Next, think about what carriers' offer: different phone models and types. If you invest in a phone from Apple, then you are committing to iPhones whereas if you invest with Sprint you have more options. Additionally, think about your geographic location and the carriers' network speed and reliability. Consumers living or working near a lot of T-Mobile or Sprint towers may want to compare these lease agreements versus other ones. After all, no one wants to deal with dropped calls or bad service options. A low monthly payment does you no good if you cannot pick up calls. Weighing your options and individual situation helps you make a smart choice about where to lease your next smartphone.
Can You Keep the Smartphone or Must You Upgrade?
At the end of a lease, not everyone wants to trade in their phone. Some people just want to keep the model they have. Thankfully, most carriers allow people to keep the phone rather than upgrade. You would switch to a month by month option until you were ready to enter into a different lease agreement. Thus, if you have grown attached to a certain model or do not want the hassle of transitioning between phones, you can still have an easy way to keep the model.
Reading the Fine Print of Lease Agreements
It is important to think of a lease as a contract, and you should always read the fine print of any contract. Leasing is a great option for consumers, but it does have requirements and conditions, especially when it comes to the trade in value of a device. For example, once you lease with a specific carrier, you have to stick with them if you want the upgrade benefits. Phone companies like leasing contracts because people buy fewer phones. Carriers want to keep their business and take other companies’ customers. If a company offers leasing, they can swoop in and snatch people away from companies that do not have this option. Customers are likely to stay with this new carrier because of the upgrade benefits.
Comparing Monthly Rates
Understanding which carriers have the lowest rates is easier said than done. You have to weigh in trade-in values and eligibility as well as the length of the lease. For example, T-Mobile may have the lowest monthly rates, but they require customer trade in devices. Apple’s program is the most expensive but it includes two years of AppleCare+ in case the device is damaged and needs to be repaired. Consumers need to think about the length of their lease, the monthly rates, how trade ins work and what comes with a carrier’s agreement.
Before leasing a phone, think about your current model and how it functions. Are you accident prone? Is your current model in good shape? Some companies ask that you trade in your current model before investing in their lease agreements. When it comes time to give back a device, it needs to be in working order. If you happen to be accident prone, then you may want to invest in an agreement that has protection. For example, Apple's AppleCare+ program helps you if you damage your phone or have an issue. The cost of this program is built into the agreement and monthly rate.
Bottom Line of Leasing
Leasing has many perks for users who want the lowest monthly payment options and the latest phones. For some people, the ability to upgrade when new models appear is really alluring. However, anyone that wants to own the phone one day will be disappointed with this purchase option. Similarly, not everyone wants to regularly upgrade their model. There are some consumers who would like the same phone for a few years. Anyone thinking about this big shift should think about their budget, phone use and what they value. Lastly, it is important to compare all of the carriers and what they offer users. Every company is a little different; it's what separates them from the competition. Reading the fine print and understanding which things are required of this lease makes you an informed consumer. Though there may be strings attached, some of them hold more value than others. Knowing the cost, upgrade details, service reliability and protection options helps you find the perfect lease for your next smartphone.
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