How many of you can afford to buy a high-end handset, like the iPhone 5 or Galaxy S III, at an unsubsidized price? Probably not too many. One option for those customers who really want a top-shelf phone is to choose a carrier who offers subsidized devices in return for signing a 2-year service agreement, which locks them into the mobile operator for 24 months. But what if you do not want to be tied to the carrier for such a long time and would rather prefer prepaid service?
In this case the situation gets a little more complicated for an average customer with not too much money to spare. Since prepaid carriers do not require their subscribers to sign contracts, there is no guarantee for how long the customer will actually use the carriers service, and this makes subsidizing phones way too risky. That is why, to purchase a high-end handset from a prepaid carrier, you normally have to pay full price upfront, which is usually around $500 – $700 or even more. Such price tag seriously limits the number of customers who can afford let’s say, Apple’s latest smartphone, the iPhone 5, or Samsung Galaxy S III.
Learn more about financing program on phones.
Two US prepaid carriers, Metro PCS and Cricket, have found a solution to this problem. Recently, they have started offering their customers financing programs that allow them to pay off cell phone purchases over time. Both carriers work with Progressive Financing, and MetroPCS also cooperates with BillFloat, to help offer customers low upfront payments on otherwise expensive smartphones.
The financing mechanism is very simple. The company pays the carrier for the handset and then collects payments from the subscriber for their phone. The customer is required to pay a small amount of money upfront and the balance is made up later through monthly installments. This will allow you to purchase, for example the above mentioned iPhone 5 from Cricket for just $105, which is around 20% of the original price.
Both, Progressive Financing and BillFloat, withdraw payments directly from a bank account, and to comply with the carriers’ prepaid business model, neither requires a credit check.
Interesting as it sounds, there is one downside though – taking into account interest and repayment fees, the customer will actually end up paying more than the original price. Anyway, even with this minor drawback, the financing program looks quite promising.