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So, Are You Going to Buy or Lease Your Next Phone?
personal finance

So, Are You Going to Buy or Lease Your Next Phone?

Patrick Lucas Austin, Gawker Media

Image credit: Joe Raedle/ Getty

If you've had the same phone for a while, you might be feeling the urge to upgrade, even though the prices right now are astronomical. The cheapest iPhone 7 is $649. Samsung's new Galaxy Note 8 is $930. So, with the upcoming iPhone 8 rumored to cost a grand when it debuts, the question is this: should you drop hundreds of bucks to buy your phone outright, or is leasing your device the way to go from here on out? Depending on how much you need the latest device, how often you travel, or how much disposable income you have, there are benefits and downsides to each method, though both get you a pretty dope phone for as long as you want it.

Buying is Great for International Travelers and Cost-Conscious Consumers

At first glance, buying a phone might seem like the way to go. Not having to worry about a thirty-something dollar charge for a device you grow increasingly unsatisfied with as you use it over the next two to four years.

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Sure, dropping over $600 on a new device isn't something you can do on a yearly basis, but that's the point. Buying your phone makes you more likely to hold onto it, to use it longer, and saves you money in the long run. With traditional phone payment plans, you end up paying more over the course of two years thanks to fees and other hidden charges. Buying upfront spares you the hidden fees and lets you simply pay for the plan.

Purchasing your phone from the manufacturer or a retail store gets you an unlocked device. Unlocked phones can be used on nearly any carrier, unlike leased phones, which are associated with particular carriers until your balance is paid (once you pay it off, you can call your carrier and ask them to unlock your device). That makes it much easier to travel around the world with the same phone, swapping SIM cards and purchasing data plans depending on your location.

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Owning your phone means you can also sell it when you're done with it , or give it to someone as a second-hand device. Selling your device is easy enough as long as it still works and isn't covered in scratches, dings, or dents (pro tip: get a case). You can trade it in for cash, gift cards , or sell it on sites like Swappa or eBay. If you're invested in smart home tech, leaving your device at home as a sort of newfangled remote might be the way to go.

The best thing about buying a smartphone outright is the end result: you now own your phone, indefinitely, until the day you choose to buy a new one. What sucks about purchasing a phone upfront is the, you know, purchasing upfront part.

$700 for an iPhone? A thousand bucks for an Android device? It's the price of a decent laptop. I can think of a lot of things I can do with a wad of cash that fat, and what I don't want to do is toss it into the maw of capitalism for the next device in my museum of planned obsolescence . Right now, Apple's most recent "vintage phone" is the iPhone 4, released in 2010. 7 years is quite some time to hold onto a phone, but it's unlikely that anyone is still using an iPhone 4, considering its last iOS update occurred in 2014, and upgraded phones tend to suffer from abysmal performance.

If You're an Early Adopter, or Love Having a New Phone, Lease It

Leasing a smartphone is a viable purchase option if you, like most people, don't have $700 to spend on a new phone at any given point. It's easier to lease a phone and either pay it off or trade it in as part of a carrier's early upgrade program (more on that below). You can now separate the costs of your plan and smartphone, a welcome change from the old phone contracts from a few years back, where wireless providers would surreptitiously fold smartphone costs into your phone bill over the course of two years, often ending with you paying a few hundred dollars more in the long run for your phone, even after your $199 initial payment.

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Now, thanks to carriers introducing early upgrade plans like T-Mobile's Jump! or AT&T's Next (Verizon's Edge early upgrade has been discontinued), you can pay a slightly increased fee for your leased smartphone with the added bonus of upgrading to a new or different model once you've made the requisite payments over the course of about a year (or paid for the phone in full). While you may end up paying more for the smartphone than buying it outright, the benefit of always getting a new one in exchange could be worth it if you're an early adopter with some disposable income.

Since leasing your phone through a wireless carrier lets you upgrade your device more often than before, curious shoppers should consider the option, if only to see what's on the other side of your walled garden. For example, iPhone owners can check out an Android device like the Samsung Galaxy Note 8 without spending nearly $1,000 on it, and simply exchange it for the next iPhone when it's available, as long as they've kept up with their monthly lease payments.

Apple's own iPhone Upgrade Plan lets you upgrade your iPhone every year, and includes its comprehensive Applecare+ repair program that covers accidental damage and provides flat rates for common repairs like broken screens. Over the course of a year, your payments will total around $390 (assuming you picked the cheapest iPhone 7), but that's half the price of an iPhone 7, with the benefit of a brand new one heading your way when you're tired of the current model.

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As a person who doesn't mind being a few years behind, I'm a fan of purchasing my phones outright. But this year's smartphones are pricey enough to have me reconsider my stance on the issue, even if it means a little more money out of my wallet when it's all said and done.

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