How To Finance A Cell Phone

While cell phones are useful tools for many people, there’s no denying how expensive they can be, particularly when it comes to the latest models. These days, the average Canadian spends at least $50 – $100 a month on their cell phone plan alone, maybe more for an all-inclusive plan with unlimited calls, texts and data in North America. Thankfully, there are a few different cell phone finance options in Canada.

Cell Phone Finance Options

As mentioned, prior research is one of the keys to finding a cell phone plan that suits your income and lifestyle. During your search, make sure to check out and compare the cost of the common cell phone financing alternatives below.

Financing a Cell Phone Through Your Current Phone Provider

Cell plans can vary greatly in price, so you’ll find that most phone providers offer several financing options, including but not limited to: 

Lease Plans

Similar to how it works with a car, a lease plan essentially allows you to rent a cell phone for a predetermined period (usually around 2 years). You would then make monthly payments until your lease term ends and eventually return the phone.

Benefits

• You get to “test-drive” a cell phone, rather than buying it outright
• If you don’t like it, you can upgrade the phone when your term is over
• Monthly lease payments can be cheaper than monthly financing payments
• Any money you save can be put to use somewhere else, like a nicer phone 

Drawbacks

• You don’t own the phone and must return it in relatively good condition
• You’ll be locked into your lease and could get penalized for any damage
• If you end your lease early, you’ll also have to pay the balance remaining 
• Additionally, you’ll have to cover the cost of your phone if you lose it 

Find out if you can end a cell phone contract early here.

Trade-In Your Phone Plans

If your current cell phone is in good shape and not a totally outdated model, you may be able to exchange it for a discount on the down payment on your next phone. A trade-in may even make your new cell phone so affordable that financing isn’t necessary.

Benefits

• A decent phone (new or old) can retain enough value for a good discount
• Providers can properly recycle your old phone (less environmental impact)

Drawbacks

• Some phones lose a lot of value whenever a new model is produced
• If your old phone is damaged or outdated, you may not get a great discount

Installment Plans

An installment personal loan plan allows you to finance (purchase) a cell phone through monthly payments. Like leasing, most installment plans last about 2 years, depending on the provider, phone and contract. Once again, a trade-in might be helpful here.

Benefits

• Installment plan payments are normally interest-free
• After financing the phone, you only have to pay your monthly service bills
• You get to keep your phone once you finish making payments
• When your installment term ends, your provider may be willing to offer you promotions or discounts to keep you as a client (negotiation can help)  

Drawbacks

• Newer phones and more inclusive installment plans can be very expensive
• Like leasing, you could get charged a fee for breaking your contract early
• Old phones may not be worth enough for decent discounts/down payments

Financing A Cell Phone Through A New Provider

There are plenty of cell providers in Canada, many of which will offer you a good deal on a new phone if you’re willing to switch to their network. So, this is another area where negotiation, comparison shopping and reading your contract carefully are key.

Benefits

• New clients can score promotions, discounts and group plan options
• Financing plans may be cheaper than with your previous cell provider
• If you sign up, some carriers will cover the full sales price of your phone 

Drawbacks

• Some providers will include many extra fees in the fine print of your new contract (account connection/cancellation, administrative, etc.)

Cell Phone Providers That Offer Financing Options

While comparison shopping, make sure to check out some of these popular cell phone providers (costs, plans and benefits can vary according to different phone models):

These figures only apply to the basic plans that these carriers offer. For instance, many of the pricier and more advanced phone models could require a large down payment.

Financing A Cell Phone With A Loan

If your income isn’t enough to support your cell phone plan, you can try financing it with a loan from a third-party lender, like a bank, credit union, or private company. This type of financing can come with more flexibility when it comes to your payment options. 

Benefits

• Repayment terms can last anywhere from several months to several years
• Many lenders offer competitive interest rates to creditworthy clients 
• Some lenders accept clients with bad credit (many cell providers won’t)
• You can use a loan to buy your cell phone (leaving only the service plan) 
• A variety of loans may be available (including secured or unsecured)
• Making timely loan payments can help build good credit

Drawbacks

• Interest rates can be high if you apply with bad credit or a low income
• You can accumulate a ton of debt, especially if you start missing payments
• If you default on a secured loan, you could lose any collateral you provided
• Enough unpaid debt can lead to penalties, debt collection and lawsuits
• Private lenders may not be as legitimate or safe as most big cell providers
• Missing payments can also damage your credit score and credit history

Financing A Cell Phone With A Credit Card

Despite it being one of the pricier options, most Canadians charge their cell phone payments to their credit card because it’s easy and convenient. Simply create your account, provide your card information and set up automatic payments.

Benefits

• Some credit cards come with rewards (points, low rates, insurance, etc.)
• Plans aren’t financed via the provider (no extra fees if you switch carriers)
• If your phone is lost, stolen or damaged, your card’s insurance may cover it
• Using a credit card responsibly can diversify and improve your credit 

Drawbacks

• Many credit cards come with high interest rates of 19.99% APR or more
• Other steep charges can apply, like overdraft and late fees
• Extra interest will also be applied to your unpaid monthly balances
• Missing payments can hurt your credit and lead to severe debt problems

Financing A Cell Phone Through The Manufacturer 

Today, many cell providers like Samsung and Apple sell their own range of in-house financing plans, along with a selection of unlocked phones. Typically, financing contracts are established through one of the provider’s partner companies or associated carriers. 

Benefits

• Some manufacturers offer decent trade-in rates, discounts and promotions
• More affordable interest-free installment plans may also be available
• When new phone models are produced, older ones can become cheaper 

Drawbacks

• Some plans can still be unaffordable for the average cell phone user
• Rates, terms and conditions may not fit your personal or financial needs

Apple Financing

In Canada, a huge part of the population are iPhone users. The only problem is that iPhones, particularly the latest versions, can be very pricey due to their high quality. So, in partnership with a third-party payment service called PayBright, Apple can offer you:

• Repayment terms of up to 24 months on eligible iPhones
• 0% interest/APR on approved credit for purchases of $99 or more
• Zero processing or borrowing fees
• Instant credit for approved trade-ins
• Easy payment conditions and fast approval decisions
• A spending limit that can be used immediately or on future Apple orders     

Samsung Financing

Like many other cell phone providers, Samsung offers financing deals on associated products. However, financing comes in the form of a revolving credit line, loaded onto your Samsung account. With this type of credit, you can access the following:

• Repayment terms of up to 24 months on eligible Galaxy phones
• No down payment required 
• 0% interest/APR on approved credit 
• Limited-time promotions and discounts on select products/plans

Keep in mind that Samsung Financing is only available for orders of $50 or more. Once you’ve created your Samsung Financing account, you’ll also get:

• Instant access to credit (you won’t have to re-apply for other purchases)
• Options to upgrade or trade-in your old device (for credit on your next one) 
• The ability to:
  • Use your credit on Samsung.com and the Shop Samsung app
  • Make payments (you’ll receive monthly statements and due dates) 
  • Monitor your account activity
  • See how much credit you have left
  • Check your account balance

Additional Reading

Best Ways To Save On Your Cell Phone Bill

Does Paying Your Phone Bill Build Credit In Canada?

How to Unlock Your Cell Phone For Free

Financing A Cell Phone Through A Retailer

Many retailers sell in-house cell phone financing too. For example, Best Buy offers credit cards with 2-year promotional terms and 0% interest, while The Source offers PayBright, either of which can help you pay off your phone.

Benefits

• Some retailers feature great promotions and discounts on various products
• You may also gain in-store benefits like loyalty points and tech support
• Different types of warranties may be available for free or an extra cost (other than the basic manufacturer warranty that comes with your phone)

Drawbacks

• Some phone models might not be compatible with your service provider
• Warranties may not cover every issue (and aren’t worth the extra money)
• You may need extremely good credit to qualify for a 0% interest rate
• Some retailers will charge processing fees on your monthly payments
• High interest rates can apply once a promotional period ends
• High administrative and membership fees can also apply 

Best Buy

Provided by Fairstone, the Best Buy Card financing program gives users a variety of flexible financing options and payments plans on select in-store purchases, as well as:

• 0% interest upon approved credit and full financing payments
• Online payments through financial institutions and Fairstone locations
• Financing periods of 6 months on eligible purchases of $299.99 or more (including cell phones) 
• Financing periods of 12 months on eligible purchases of $399.99 or more (including cell phones) 

Quebec residents may be subject to different rules, application conditions and fees when buying items through Best Buy card financing.

The Source

Similar to Apple financing, The Source uses PayBright for in-house cell phone financing, along with stress-free automatic payment plans of 12 and 24 months. All you have to do is select PayBright when you check out, apply for your account (which takes less than a minute and has a high approval rate), then confirm your order and finish your purchase. 

Soon after, your cell phone will be shipped to your address or The Source location of your choosing. Here are a few other important things to know about PayBright financing through The Source:

• Financing is only available for orders of $200 to $15,000
• Interest rates can vary from 9.95% to 19.95% (depending on credit) 
• You must be at least 18 or 19 years of age to use it (depending on province) 

Financing A Cell Phone Doesn’t Have To Be A Headache

Although a cell phone can be very expensive, there are plenty of ways that you can finance it affordably, if you know where to look. Just remember to do a lot of research and compare several sources before making your final decision. A cell phone is meant to be a valuable tool to improve your life, not a device that ruins your finances.