There’s no doubt that it is the age of the smartphone. However, upgrading to one of the best phones comes with a cost, and in most cases, it's a higher cost than many can pay in one go.
Phones have never really been cheap, but nowadays many top models easily exceed $1,000. This is a massive barrier to entry for the majority of shoppers. However, there is an option available for customers: financing, or paying off your phone in regular installments spread out over time.
Now, I have personal experience with financing, having recently bought a gaming laptop. While my experience has largely been positive, there are more than a few things that I wish I had known before I started.
If you plan on buying a new phone and are considering financing, follow me as I break down everything you need to know, and what to be aware of.
How does financing work?
Financing isn't complicated, but there is more than one type of plan. However, they all follow the same basic principle. In the simplest terms, financing means that you don’t pay for something straight away. Instead, the cost of the item is broken up into payments that you pay through a direct debit weekly, monthly or annually.
There are several benefits to financing, the main being that you don’t have to gather all the cash for your purchase at once, making the cost of a phone much more reasonable for the average person. However, many financing plans have interest attached to each payment, meaning the payments usually wind up being more than the item's price.
There are also several different types of installment plans. For instance, my laptop requires me to pay the set amount within a year with no interest. However, If I don’t, then I will have to pay through a direct debit with attached interest. In the case of phones, at least in the U.S., wireless carriers will typically let you pay off your phone in installments without interest — but since those installments plan run as long as three years, that means you're committing to three years of monthly wireless service payments on top of what you pay for the phone.
Companies should always make it clear how long the finance option is, and how much the interest is. It is worth noting that the interest charged on financed items can often be pretty high. For instance, the plan I would be on if I don’t pay the laptop off is around 20%. However, some finance options don’t charge interest on shorter periods; for instance, Klarna will offer a plan that has users make payments over three months with no interest charged.
What you need to consider when financing a device
Let’s say you want to buy the Galaxy Z Fold 6, which costs $1,899 from Samsung’s site. That’s a lot of money to pony up in one go, so you find a plan that lets you pay off the phone over 12 months with 20% interest. That means you’ll be paying $158.33 plus the interest a month. All of this will be in the contract you are asked to sign, so make sure you read it fully.
After having read the contract, the first thing to consider is if you can make those payments each month and if you can budget for that long. It's also worth being aware that the interest addition means you will be paying more for the phone than you would if you bought it straight up.
The second thing to note is that you will have to pay off the phone regardless of what happens to it. That means you'll have to keep making the payments, even if the phone is lost or stolen. As such, it’s worth being aware of how to protect your new phone so that it stays in the best possible condition. It’s also worth investing in a case and possibly insurance to make sure you have solutions in the event of a tragedy.
Finally, you need to be aware of what to do when things go wrong. For instance, the first time I bought a new laptop it was stolen in transit, so I never got it. However, as the last point stated, I was still on the hook for payments.
As such, when I received the shower caddy that was supposed to be a laptop, I instantly called Amazon, took images and organized a return. Not only that, I also contacted the lenders directly to make them aware of the situation and to confirm when the order was officially canceled. Always keep all the details and contact everyone. Also, I always recommend organizing for collection when it comes to tech as there's less chance of it going missing.
So, is financing right for you?
There is often a push by companies to make customers consider financing, and there’s an argument that those offers are designed to appear better than they really are. If you know how much money you are bringing in, but don’t consider yourself a strong saver, or aren’t willing to wait for that iPhone 16 Pro Max, then financing is a viable option.
However, if you are unsure about if you can keep up the payments, or want to try and save up some cash or wait for a sale, then maybe wait for a moment. The main thing to note is that, for the majority of products, they aren’t going anywhere. While the salesperson might be pushing you to buy now, there is plenty of time to wait before grabbing that Pixel 9 Pro Fold, so take a breath and consider all the options.
At the end of the day, it’s all down to choice, and life is already a constant stream of numbers being taken out of our accounts. Some of the best phones and especially the best foldables are all pretty pricey, but there are options. You just need to be sure they are right for you.
More from Tom's Guide
