6 Cellphone Financing Options to Keep You Connected
Your wireless carrier would have you think that the only way to finance the newest smartphone is by signing a contract, but you have options. There are plenty of cellphone financing options, from no-interest monthly installment plans to personal loans.
But keep in mind that even with financing, the newest smartphone might not fit into your budget. Take an in-depth look at your finances before deciding how to finance your cellphone purchase.
Ways to pay for a new cellphone:
1. Switch carriers to get a deal
In a bid to woo potential customers, cellphone carriers offer deals on smartphones just for switching to their service. A new carrier may offer:
- Buy one, get one free smartphones for customers who switch to an eligible plan.
- No-credit check cellphone financing when you sign up for a qualifying phone plan.
- Trade-in discounts to get money toward a new phone by trading in your old device.
There’s one limitation, though: If you finance your smartphone through your current network, you’ll be left with the remaining balance should you want to switch to another wireless carrier before you’ve paid off the phone. Some carriers, however, will offer to pay off your current smartphone and termination fees up to a limit if you switch.
| Pros | Cons |
| A new carrier may offer to pay off your current smartphone to get you to switch.
You can get a deal on the phone itself, which can cut overall costs. You may save money on your monthly bill by switching carriers. |
Researching and switching carriers can be time-consuming.
Carriers may not provide adequate cell phone service in your area. You may be stuck with an early termination fee with your current carrier. |
2. Finance through your current carrier
Switching wireless carriers can be a lot of work between research and negotiation. If you don’t want to go through the trouble, see if your current wireless carrier offers no-interest financing. It may be hidden under the name of an “equipment installment plan” or “device payment program.”
Since these installment plans don’t charge interest, it’s essentially free cellphone financing, providing you make payments on time. No-interest cellphone payment plans may not require a hard credit check. Plus, you could reduce the cost of financing by trading in your old smartphone for a discount.
One downside of financing through your carrier: You could be tied down to your plan until you’ve paid the phone in full. If you want to switch before the device is paid off, you’ll be responsible for paying the remaining balance. Plus, some carriers require a down payment on the device.
| Pros | Cons |
| You could secure no-interest financing if the phone is paid off in full on time.
You don’t have to go through the hassle of switching carriers. You may be able to get a discount on a new phone if you trade in your current smartphone. You may not have to be subject to a hard credit inquiry. |
You’ll be tied down to your carrier until the phone is paid in full.
You could end up paying full MSRP for the phone with financing. Some carriers require a down payment that may make financing unattainable. You’ll be subject to fees if you fail to make payments in full and on time over the financing period. |
3. Enroll in financing through the phone company
You don’t have to finance through your wireless carrier to get a 0% APR. Cell phone companies also offer no-interesting financing plans to help you break up the cost of your device into smaller monthly payments.
For example: If you want to buy a new iPhone, you could qualify for no-interest financing by opening an Apple Card. Samsung Financing offers $0 down and 0% APR for up to 36 months on Samsung products, including the Galaxy smartphone series. These offers are subject to credit approval, and you may have to submit to a hard credit inquiry.
To get an idea of your eligibility, you can check your credit score for free on the LendingTree app:
You can also check and monitor your credit score for free on My Lendingtree app.
This type of financing is pretty similar to what you would get if you financed through your wireless carrier. But if you choose to finance directly through Apple or Samsung, you’ll have the freedom to switch wireless carriers as you see fit. You may be able to trade in your current device for a discount if you go this route, too.
| Pros | Cons |
| You’ll pay no interest as long as you adhere to the payment guidelines.
You can more easily switch between wireless carriers. You may get credit for trading in an eligible device. |
A hard credit inquiry is typically required.
You will likely pay full MSRP without a trade-in. |
4. Take out a personal loan
Another potential way to finance a smartphone purchase is with a small personal loan. With this option, you’re not tied down to your carrier but you are tied down to a loan with interest.
Personal loans are lump-sum loans that are typically unsecured, which means they don’t require collateral. Because of this, personal loan lenders determine eligibility based on your financial history, including your credit score and debt-to-income ratio.
Whereas your carrier might allow for 0% APR financing, you’ll end up paying interest if you take out a personal loan to finance a cellphone. See how much it would cost to finance a small personal loan over the course of a year, based on two different credit score scenarios.
| Financing $1,000 using a personal loan over 1 year | ||
| Credit score | 760+ | 640-679 |
| Est. interest rate* | 9.77% APR | 22.45% APR |
| Monthly payment | $88 | $94 |
| Total paid | $1,054 | $1,126 |
| Interest paid | $54 | $126 |
| *Based on February 2021 LendingTree data.
Annual percentage rate (APR) is a measure of your cost of borrowing and includes the interest rate plus other fees. Available APRs may differ based on your location. |
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Another important factor to note: Personal loans are typically worth $1,000 or more, which may be more than you need to borrow to buy a smartphone.
| Pros | Cons |
| You won’t be tied down to your wireless carrier if you wanted to switch networks.
Some personal loans offer options for those with bad credit or no credit, albeit with a higher APR. |
While most cellphone financing options carry no interest when paid on time and in full, a personal loan always has interest.
You may have trouble finding a personal loan amount small enough to finance a cell phone. Personal loans may come with fees, such as a loan origination fee of 1%-8% of the loan cost. |
5. Buy a phone from a store that offers point-of-sale financing
Financing your new phone could be as simple as heading down to your local strip mall. A number of big-box retailers, including Best Buy, Target and Walmart, sell smartphones and offer point-of-sale financing.
Also known as “buy now, pay later” agreements, point-of-sale financing lets you break up your purchase into equal monthly installments. These may require a down payment as well as a hard credit inquiry. Plus, you may be charged interest on your purchase.
Each retailer has its own financing system with unique terms and conditions. Best Buy offers smartphone financing through its store-branded credit card. Walmart’s cellphones can be financed through the third-party lending service Affirm, which charges up to 30.00% APR, depending on your credit history.
| Pros | Cons |
| You won’t be tied down to a wireless carrier.
Some stores offer deferred-interest financing options. You could score a deal on the phone if you shop an older model or refurbished phone. |
If you miss a payment or don’t pay it off within the time allotted, you could be subject to fees.
Some retailers offer payment plans that charge interest. Many of these offers are subject to a hard credit check. |
6. Take advantage of a 0% APR credit card offer
Consumers with good-to-excellent credit might consider charging a new smartphone to a credit card with a 0% introductory APR. These offers typically last up to 18 months, which could give you plenty of time to pay off the cellphone before the no-interest period ends. If you’re confident that you can pay off the purchase within the allotted timeline, you could actually earn cash back, travel miles or rewards points without paying a penny in interest.
Those with low or no credit may have a hard time qualifying for a rewards card, and an even harder time getting a competitive APR.
| Pros | Cons |
| You could avoid paying interest if you pay off the phone within a card’s introductory 0% APR period.
You may also earn points, miles or cash back. You won’t be tied down to a wireless carrier. |
Not everyone qualifies for these offers.
If you carry a balance past the intro period, you will be charged interest. Not all borrowers will qualify for this kind of offer. |