Did you know that you could buy your handset now and pay later? If you want to own the latest handset but has no cash to pay for it upfront, there are now financing options you can apply for. With handsets becoming more and more advanced and expensive by the day, these options are also becoming more popular among subscribers across UK.
But should you take one? Like any other types of financing, buying your mobile phone on finance has potential financial consequences if not taken responsibly. If you’re planning to finance your next handset purchase, it’s best to know the pros and cons of this financial move.
What are the advantages?
Financing mobile phones has been a popular option for many consumers in the UK for a number of reasons. Here are some of the advantages you can also enjoy:
Avail the latest handsets
With mobile phone financing, you get to avail the latest handsets even if you don’t have the cash to pay for the phone upfront. As long as you meet the basic requirements, you have the freedom to choose any handset you want. With financing, you get to spread over the phone’s cost over a 12-month period or longer. Most financing options also don’t require any upfront payment so it’s really one of the easiest ways to own the latest handset.
Unlike other major types of financing like a house or car, mobile phone financing only has minimal requirements. In most cases, you’ll just need to be of legal age, a UK resident and must provide proof of steady income. If you have good credit, approval is super quick but if even if you have a less than stellar credit rating you are still welcome to apply.
Approval with this type of financing is also very fast. As long as you meet the requirements and provide the necessary documents, you can expect to get approved in as fast as within 24 hours.
What are the disadvantages?
While advantages in some ways, financing your mobile phone also has its set of disadvantages. Below are two of its major disadvantages:
Handsets depreciate quickly
If you opt for mobile phone financing, one of the biggest disadvantages is the fact that mobile phones depreciate quickly. If you buy the latest iPhone today, the price drops quickly in just a few months. If you’re financing, for example, is over an 18-month period, you’ll still be paying for the original price but at present, the price has already dropped significantly. There’s also the fact that major manufacturers release new phones yearly. You’d already want the new release but you’re still paying for your mobile phone on finance.
Nonpayment may hurt your credit score
Another major disadvantage is the potential damage it can cause your credit score. Because financing can be lengthy, the possibility of delayed or missed payments is always there. If this happens, you may end up with poor credit rating as a result.
Should you finance your phone?
Considering the pros and cons, should you finance your phone? As long as you’re sure that you can handle the monthly repayments, you should go ahead and finance your phone. Just keep in mind that one delayed or missed payment may lead to extra charges and fees. Opting for short term financing is also more recommended as interest rates is lower this way. While you’re at it, follow the simple rule to finance only what you need and what you can afford.