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Why Buying a Phone Outright is Smarter than Buying on a Plan

By August 2, 2019phones

At the end of every year, the latest crop of new smartphones makes their way into the stores, which often brings shoppers to a critical question: Is it better to buy a phone outright or buy it on a plan?

It may be tempting to go with the plan payment option. After all, that’s what usually accompanies all the advertising and promotional emails. However, not having to spend up to $2000 for a high-end model phone is very appealing.

Here are some reasons why buying your smartphone outright is often the smarter option (this also applies to those using Afterpay to buy the phone).

Flexibility is Important

A lot can change in 24 months. Your needs for something other than what the contract provides can escalate. Over the last 12 months, according to a commercial analysis done in Australia in 2018, the average person’s data usage doubled.

This can be a problem for anyone who is locked into a contract with a small or limited amount of data. Selling extra data is big business for phone companies, and they know that you will have to supplement it with added expenditure

Better Value

The consumer group Choice reported in August 2018 that buying a phone outright is a better value. They checked all the phone payment plans with contract options and weighed them up against SIM-only ones. Across the board, the SIM-only plans offered more data and bigger phone allowances.

The comparison website Whistleout backed up this report after their data came out, but with a caveat: Outright ownership was the better option but only when the phone and SIM-card were paid for in cash. The issue was that with new model phones costing around the $2000 mark; not many people have that kind of spare cash lying around.

The answer to this dilemma is straightforward. Wait a while for the exciting end of year rush for the new phone to die down and snap up the model that came out the previous year for a much lower price.

smart phonesWhat About Credit?

The consumer should be cautious when buying a phone outright using credit. They might not be locked into a contract with the phone provider company, but they will be obligated to paying off the borrowed amount with whatever interest rates and fees the credit company has stipulated.

In contrast to this, when you opt for a contract, the cost of your new phone will be divided into equal payments over 24 months, but it will be interest-free. There are even some phone companies that allow a three-year interest-free payment schedule. The reason for this generosity is because getting to you to sign a contract with them means that you are shut in to being their customer for a long time.


If you’re one of those phone fans who must have the latest model that comes on the market, then consider getting one of the top-tier brands. They hold onto their resale value over time much better. This means that you can parlay the profits made from selling your phone into the next one you buy.

There are a few leasing deals offered by some phone providers that are, generally, not worth it. They might be phrased to sound affordable, but it takes the option for reselling or regifting out of your hands.

If you are a savvy shopper, you will save like anything all year to be able to pay cash for your new phone when it comes out and stay away from contract deals.

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