Until recently I have purchased all of my iPhones through some kind of subsidized deal through my carrier (which is AT&T). And up until just the last few years we really haven't had a choice. A few years back Apple started selling the iPhone for "full price" and unlocked from any carrier. Then a year or two after that the major cell carriers started moving away from offering a "subsidized" iPhone ($200 with a 2-year contract type of deal) and moved to plan where you slowed paid off the full price of the iPhone over an 18-month to 2-year period with no interest (but were still locked into a 18-month to 2-year cellular contract). Then last year Apple offered up what they call the "iPhone Upgrade program. It's kinda of a mix between 0% financing and a lease because you can do either. Apple's Program is this:
- You pay the full price of the iPhone plus the cost of Apple Care
- That full price is split up into 24 monthly payments
- If you choose, after 12 payments you can exchange your existing iPhone for the next year's model phone and start all over again with 24 more monthly payments
- You can also choose to just keep paying your monthly payment until you own the phone
There are several advantages to Apple's Upgrade program:
- You can upgrade to the new iPhone every year and skip the hassle of having to try and sell your old iPhone
- The iPhone comes unlocked from any specific carrier, so you can change carriers at any time and take advantage of pre-paid SIM cards when traveling overseas (which saves you a ton of money)
- It comes with Apple Care, so you are covered if you accidentally damage your phone or the phone has problems any time during the 2 year coverage period
So what is the cost difference between going with one of the current carrier options and just buying the phone using Apple's Upgrade program? Below is a table comparing the cost of AT&T next and Apple's Upgrade Program.
But these cost comparisons aren't totally realistic. The $415 resell that I got for my iPhone is not what most people will get. My iPhone 6 Plus was in "like new" condition and I sell my used iPhones on Amazon, where I have a seller account. The average person generally doesn't want to go through the hassle of doing this. So it is more realistic to look at the trade-in value you would get from company like Gazelle. If I had sold my iPhone 6 Plus to Gazelle instead I would have received $220 instead of $415. You also need to take out the cost of Apple Care from the Apple Upgrade program if you truly want to do an "apples to apples" comparison. The adjusted comparison numbers are shown below:
So, the bottom line is that you are still paying a bit of a premium if you go with the Apple Upgrade program (about $300 over 2-years). But for that $300 you don't ever have to sell your iPhone ever again and if you travel overseas you can just pop in a local SIM card and save yourself some money. So unless you are planning to hang on to your iPhone for 3 or more years, you might want to consider spending a little extra money and just going the iPhone Upgrade program route. When you trade in your iPhone at the end of the 12 months for the next year's iPhone model the phone just needs to be fully operational with an unbroken screen. So even if you are prone to dropping your phone and scratching it up it won't cost you anything to trade in that battle-hardened iPhone for the new iPhone. Where as if you were trying to sell that same iPhone on Amazon like I used to do, the value of the phone would take a hit (due to the scratches) and the $300 you were thinking you were saving by going the route of buying through the carrier would quickly disappear. Since I tend to travel overseas at least once or twice a year, having an unlocked iPhone saves me a chunk of change each time. I also like having the latest and greatest iPhone, so in the end I'm really only paying an extra $100-$200 every 2-years and for me its worth it. It may not be worth it for other people though. Either way, there are some numbers for you to consider.