The choice to buy a brand new phone or a used phone is one that every user will have to make at one point or another. Whether you want to save money or don’t want to be limited to one carrier. The reasons are endless!
The issue is that not only are most people not fully educated on their options, but they’re also unfamiliar with the pros and cons of their options.
We’ve put together a list of the benefits and setbacks of buying new and used phones.
Benefits of buying brand new:
1. There are multiple options when you’re looking at buying a brand new phone. You can go directly to a carrier where they will have you pick a monthly service plan, a new phone and sign you up on a two-year contract. By doing this, you get a discount on the device or the device can sometimes cost you nothing upfront. The monthly fee that you will pay to have the phone service will include things like LTE, minutes, texting, etc – and it also pays down your phone balance every month. Kind of like a small loan.
2. Instead of forking out hundred of dollars for a new phone all at once – which let’s face it, most of us can’t do – you pay the balance of the phone off in small monthly installments. Don’t worry, these are not separate payments you have to worry about, it’s simply part of your regular monthly bill.
3. You have extensive customer service who can help you will any technical and billing issues. They also offer a one year manufacturer’s warranty in case there are any issues with your device that are beyond your control – such as manufacturing defects. They will simply send your phone away for repair and provide you with a loaner phone – of equal value and performance of your own device – while it’s away being repaired.
4. Carriers offer cost effective monthly plans for those of you who have families and need more than one device! You will often receive discounted rates for sharing your minutes and data, and the data plans are quite a bit higher to compensate for the additional users. That’s a win-win!
Setbacks to buying brand new:
1. If you no longer want to be a client of the carrier you purchased your phone from and to whom you’ve been paying your monthly phone bill, you have to pay a “cancellation fee”. Now you may be thinking “I thought carriers weren’t allowed to put people on contracts anymore.” In a sense, you are correct, however, when you sign up for a monthly plan, these carriers provide you with a discount on a phone and sometimes they will even give you a phone for free. The catch is that the value of the phone is put onto your account as your “phone balance” which slowly decreases as you continue to pay your monthly bill.
Each carrier has their own policies and prices, so just make sure you educate yourself before making a decision. Here’s an example of what signing up for a two-year plan and slowly paying off your balance looks like:
John signed a two-year service term and received a $580 discount on a Samsung Galaxy Note:
- Full price: $779.99
- What John paid: $199.99
- John’s discount: $580
- His device balance is $580 / 24 months = $24.16 per month
2. Getting a discount on a phone and signing up for a two-year plan is actually more expensive in the long run! After paying an activation fee, monthly service fees and any overage fees you may accumulate, the total amount ends up being substantially higher than if you had just bought the phone up front.
3. You don’t have as many phone choices. When you choose a carrier, that carrier only carries certain devices. Many phones are exclusive to one specific carrier, which limits you to what you can choose. It’s also often the case that one carrier will have a crazy deal on a device but you can’t take advantage of it because you’re already locked in with another.
Benefits of buying at full retail price:
1. You have complete and total freedom when it comes to what carrier you go to for service, you can pick your plan based on your needs – not how much of a discount you want on your phone – and you can cancel whenever you want. On top of that, there are no additional charges when you cancel. Who doesn’t want that!?
2. Like we said before, signing up for a two-year agreement ends up being more expensive in the long run. Now we understand that buying a phone at retail cost is a big cost to swallow BUT, it saves you a ton of money in the long run. Why? You can choose a cheaper monthly plan AND you can cancel whenever you want at no extra cost.
3. When you buy up front, there are no credit checks necessary. We all know that when you apply for services, loans, etc, you get a little ding on your credit. If there’s an option to avoid that ding, then why not take advantage of it?
4. All phones are now sold unlocked! So you can buy a phone from anywhere and use it with any carrier. That means you can take advantage of monthly plan promotions and shop around to see what’s best for you. Again, total freedom!
5. You have so many more phone choices. You no longer have to stick with what one carrier has to offer. If Bell doesn’t have the phone you want to buy, then go check out Rogers. Have I said total freedom yet?
Setbacks to buying at full retail price:
1. It’s a big cost up front. If you’re someone who is all about the “now” saving, then buying up front might not be the option for you. Buying up front is a long term save but you have to put out a lot of money up front. For example, the iPhone 8 Plus costs $1,059 plus tax at the Apple store. So keep this in mind when you’re trying to find your ideal option.
2. It’s unfortunate, but true that if you don’t sign up for a two-year plan, customer service quality drops drastically. If you go with pre-paid or month to month, then they don’t necessarily bend over backwards for you because they know you can just leave whenever you want and they’re not making as much money off of you.
Benefits of buying used
1. Similar to buying a brand new phone up front – but way cheaper – buying a used phone means you have no contract and you can take your phone to any carrier. You can choose a prepaid or month to month plan, and have no extra fees if you want to cancel.
2. Buying used phones is much cheaper than buying new – obviously. The cost all depends on the cosmetic and internal condition of the device, the person or company you’re buying from and how they price it.
3. You have access to cheaper phone plans because you don’t have a balance owing on your device.
4. You can find a wide variety of used phones. Newly released phones can be available on the used market in as little as one month after its release date.
5. You can negotiate to get yourself a better purchasing price. If you offer the seller a reasonable price, they will typically say “yes”. However, if you low-ball them, they will be quick to stop responding to you.
Setbacks to buying used:
1. You need to do more research to make sure you’re properly inspecting the phone prior to purchasing it so you don’t get ripped off. If you prefer to shop from reputable companies – versus single people online – check out our list of available used phones.
2. There is a risk of being ripped off. You could purchase a blacklisted phone or one that has damage beyond repair. So again, do your research and inspect the phone.
3. It can be time consuming. You clearly want to find the best deal while also getting a good quality phone. This can take time – and often more than you would think – especially if you’re looking for a specific model, color, etc.
4. Lower quality customer service. Like I said before, not going on a two-year plan often results in lower quality customer service.
We hope this information helps you determine your best option. By understanding these benefits and setbacks, you’ll be able to avoid bad phone purchases and make sure you’re getting the best value for your dollar.