The next time you go buy a new cellphone, things are going to look a lot different.
Heres what you gotta know about buying a phone in 2016.
January 2016:This post has been updated with new information regarding AT&Ts plans.
As of January 8th, AT&T willno longer have subsidized contracts, so plan accordingly.
Or stop buying phones from carriers, becauseit really sucks.
Youd think buying a new phone would be easy.
you’re free to walk into a store and buy a laptop or tablet.
Why not a phone?
Part of its our fault.
We want the hottest new phone without paying a bunch up front.
Carriers have met that need with a mound of increasingly complicated plans.
While each carriers plans have their own unique quirks, broadly, they have some common ground.
These phones are either free upfront, or sold at a steep discount.
When your contract is up, you own the phone.
Typically the cost of your phone is divided over 24 months.
As long as you still owe money on your phone, you cant leave your carrier.
When youve paid the phone off, you own it.
Some carriers lease plans allow you to upgrade much more often than the usual two years.
However, you wont own any of the phones unless you pay a large fee to buy it out.
If it breaks and you dont have insurance, youll also be on the hook for the full price.
Early upgrade:Early upgrade plans tend to be the most convoluted options.
These are kind of a halfway point between leasing and financing.
They typically allow you to upgrade sooner than every two years.
Unfortunately, the details of the contracts make them confusing.
Your monthly service plan will usually cost less as well, since youre not paying for hardware.
Not every carrier will offer every one of these options.
Some may offer all of them, while others only have one or two.
There is no one perfect plan for everyone.
Its the only way to buy a phone short of paying full price up front.
With equipment Payments, you pay for your phone over the course of 24 months.
For example, an individual line on Verizon with 3GB of data currently costs $65/month.
Verizon requires that you continue paying for service until your phone is paid off.
If you want to leave early, it will cost you.
it’s possible for you to check out ourguide to finding a compatible phone here.
There are only two questions to ask.
The first is, can you get a better deal on a phone elsewhere?
Secondly, will you be happy with Verizons service long term?
If youre comfortable staying with Verizon long term, financing is a perfectly fine deal.
The bottom line:Verizons plans are easily the simplest of any carrier right now.
Sprint still requires some complex math to figure out the best deal.
If you want a solid major web link without a silly upgrade rigamarole, Verizons a good choice.
AT&T
AT&T has mercifully simplified its plans, beginning January 8th 2016.
Now, its a lot easier to pick the best option for you.
However, there are options if you want to upgrade early.
It also doubles as an early upgrade option, which well come back to in a bit.
The cost of your phone is then divided over that time, and added to your monthly cost.
AT&T Next 18:Pay off your phone over 24 months, or upgrade after 18.
AT&T Next 12:Pay off your phone over 20 months, or upgrade after 12.
Then, that monthly price will be added to your service bill.
Say your phone normally costs $600.
With Next 18, youll pay $25 per month for two years.
Once youve made all your payments, the phone is yours and you might leave AT&T.
If you want to leave early, youll need to pay whatever remains of your phones balance.
The only difference is that now, your monthly bill will vary with the cost of your phone.
Once youve saved up enough, you’ve got the option to pay off the whole thing.
Weve discussed before how these options mayresult in a bad deal.
it’s possible for you to then get a new phone and start your payment plan over again.
The plan number indicates when you’ve got the option to upgrade.
Youre essentially paying to lease the phone for one to two years.
Worse yet, the longer Next plans are worse for you than the shorter ones are.
For example, say you bought a $600 phone with Next 24.
Youll have paid $480 over two years before you’re able to upgrade.
Even getting $200 for your old phone would still put you ahead at that point.
If you want to upgrade early, shorter contracts are better.
If you break it, youre also on the hook, by the way.
Just stay away from the longer-term plans if you’re able to.
Phones have price tags, you give the cashier money, and youre done.
Youre not paying for a phone every month, so your bill will be lower.
Youll also be free to switch carriers or upgrade whenever you have the money to do so.
you’ve got the option to also useWillMyPhoneWorkto find out if youre not sure.
The only complication is with AT&T Nexts early upgrade options.
However, we strongly recommend considering an alternative first.
The bottom line:Getting rid of subsidies made AT&Ts plans much easier to understand.
Either immediately, or over time.
The carrier started the trend back in 2013 byditching subsidies altogether.
They refer to this as theirEquipment Installment Plan(EIP).
You may have to pay a down payment, depending on your credit and the cost of the handset.
You cant just overpay your regular bill, though.
This will lower your overall EIP balance and thus reduce your next overall monthly payments to T-Mobile.
Once your gadget is paid off, the EIP charge goes away and you just continue paying for service.
you could also finance multiple devices on the same line of credit.
When youre first approved for an EIP, youll get a spending limit.
T-Mobile wont make you pay the full price of any previous devices when adding a new one.
Option #2: Get An Early Upgrade (and Phone Insurance) With Jump!
T-Mobiles first early upgrade plan is called Jump!
However, that also includesdevice insurance.
If you were not planning to get insurance, however, its an extra $120 per year.
Once youre signed up for the plan, youll make monthly payments towards your rig like normal.
For example, lets say you start with a $600 phone and pay off $300.
For another $300, you could own the phone.
If you then sold it for more than $300, youd save money versus trading it in.
If youre willing to put in the effort to sell your old phones, trading in phones via Jump!
is probably not going to be the most frugal option.
Option #3: Lease Certain Newer Phones With Jump!
On Demand
T-Mobiles newest plan is technically a lease.
Of course, since this is a lease, there are a few caveats.
First, you wont actually own the gear unless you buy it out.
If you decide to upgrade at any point during this 18 month period, the clock starts over.
Also, this only applies to certain phones.
This includes flagships like the latest iPhone, Galaxy S 6 Edge, LG G4, and others.
T-Mobile has added new handsets since the programs inception, but its not a wide selection.
The major downside is that youre basically throwing away money on the phones you trade in.
When you trade that phone in, that moneys gone.
You have nothing to sell and youll start your payments on a new phone all over again.
That said, there are still some advantages here.
For starters, you could walk away from T-Mobile atabsolutely any time.
Additionally, some people simply may not want to sell their old phones.
Option #4: Buy Your Phone Outright
Yep, this is still an option.
Additionally, T-Mobiles service plans are going to cost the same no matter how you buy your phone.
With rare exception, T-Mobiles plans are simple.
You just have to pay for your phone.
Financing is a straightforward way to do that.
Just keep paying your monthly installments until your phone is paid off, then keep it.
On Demand is geared towards rapid upgraders who also wont sell or use their old phones.
However, the limit on which handsets actually qualify for the plan makes it less attractive.
The bottom line:Like AT&T, T-Mobiles plans are a little confusing, but generally fair.
Only Verizons plans are simpler, but thats also because they dont have any early upgrade options at all.
Sprints plans are considerably more complicated and make it much harder to find a decent deal.
Sprint
Currently, Sprint offers a variety of options for getting a new phone.
For now, though, things are confusing as heck.
Lets begin at the beginning.
Well come back to that in a moment.
Its unclear if these will count towards your Purchase Option payment if you decided to exercise that later.
Youre still locked to the same phone on the same carrier for two years.
However, at the end of the term, you have to spendmoremoney to own your phone.
The one area you do save is upfront payments.
Subsidized plans often require you to pay an amount upfront to qualify for the subsidy.
Additionally, Sprints lease programsstillarent available for all phones.
The only way to get them is either through financing or a two-year contract.
Option #2: Finance Your Phone With Monthly Payments
Sprints financing plan iscalled Easy Pay.
In most cases, this is pretty straightforward.
As an example, Sprint is currently selling theHTC One M9for $27/month under Easy Pay.
This is the same price youll pay if you buy the phone outright today.
However, Sprint also offers this phone on a subsidy.
In effect, youre paying $25 per month for the phone itself.
Thats slightly cheaper than Easy Pay, right?
However, the M9alsorequires a $99 down payment.
Even buying the phone outright from Sprint only costs $552.
Not all phones from Sprint have this wild discrepancy.
Flagships in particular seemed to at least have agreement between the overall financing price and the full purchase price.
However, its still something to watch out for during the few months that these options remain available.
Functionally, theyre not much different from Sprints financing plans, though their price is standard.
On an individual plan, service normally costs $60 per month.
With a subsidized phone on a two-year contract, that monthly price is $85.
As we discussed in the last section, choosing the best plan depends on which phone you get.
Heres a way to simplify the math:
Divide the subsidized plans upfront cost of the phone by 24.
Add 25 to that number.
If the total is higher than the Easy Pay monthly payment on the financing plan, choose Easy Pay.
Otherwise, use the subsidy.
For some reason, only some of the phones listed on Sprints website have consistent pricing.
As mentioned previously, the older Galaxy S 5 had wildly different prices just for financing vs. buying outright.
So, be sure to check your math forevery phonejust to double-check.
As long as Sprints financing plans still exist, buying outright can occasionally be a poor choice.
In those semi-rare cases, its more financially prudent to go with financing.
Of course, you wont be able to leave Sprint until your financing agreement is paid off.
Just be sure to take any activation fees into account, as well.
Subsidized phone plans still arent ideal, and financing locks you in until you pay off your rig.
If you really want a favorable deal with Sprint, upgrade as soon as you could.
What About Apples iPhone Upgrade Program?
If youre an iPhone user, youve probably heard about Apples new early upgrade program.
You get full AppleCare+ coverage, and you’re able to upgrade to the newest iPhone every year.
Photos byMike Mozart,Mike Mozart,Mike Mozart, andMike Mozart.
