A NEW iPhone goes on sale within days and one of the biggest questions facing consumers is whether they buy it outright or pay it off gradually through contracts.
The cost of smartphones has surged above 000 for high-end Apple models — a lot of cash for a shiny new gadget — but phone specialists say outright ownership can deliver better deals in a fast-changing mobile market.
Maik Retzlaff, amaysim’s commercial director mobile, said while contracts offered convenience and no lump sum payable upfront, his preference was to own outright. “Don’t lock yourself into a contract,” he said.
“If you’re a savvy shopper, buying outright will pay off in the long run.”
Mr Retzlaff said flexibility was important because a lot changed during a 24-month contract. “We know that over the last 12 months the average person’s data usage has doubled,” he said. Some cheap contracts had small data allowances “which can lead to a sting”.
There were finance options available to pay off phones but people should check interest rates and fees, Mr Retzlaff said. They could also wait a while and snap up a previous model cheaply.
A report last month by consumer group Choice said it was often better value to buy phones outright because SIM-only plans tended to have more data and phone allowances.
Comparison website Whistleout.com.au’s publisher, Joe Hanlon, said outright ownership was usually a better option “but whether you have 000 to lay down on a new phone is another question”.
In a contract, the cost of a new phone is usually divided into equal interest-free payments over the two-year agreement. “So when you do the maths it kind of works out the same,” said Mr Hanlon, adding that Vodafone now spreads this out over three years.
Leasing deals are spruiked by some providers but are generally not great — especially for people who can hand down older phones to children. “The iPhone holds its value over time — at the end of the two-year contract you still have a lot of value,” Mr Hanlon said.