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Smartphone Leasing Versus Buying: Which Costs Less?

Should you lease or buy your next smartphone? Flipsy.com lists the pros and cons of each and reveals whether it's cheaper to lease or buy

Wireless carriers are changing the smartphone landscape by offering lease programs promising to save customers money and make it easy to upgrade to the latest and greatest devices. Here, Flipsy investigates how smartphone lease programs such as Sprint Lease and T-Mobile JUMP On Demand! stack up to buying phones the traditional way.

Smartphone leasing versus buying: How it works

If you don't purchase your smartphones at full retail price, which could be in the $600 to $700 range for popular models such as the Apple iPhone 6 and Samsung Galaxy S6, chances are you subsidize your phones with your carrier. Traditionally, this means putting $199 down and agreeing to a two-year contract.

Recently, carriers have begun offering financing; instead of an upfront fee, you pay for your device over the duration of your contract. Sprint's Easy Pay and T-Mobile's JUMP plans are examples, as are Verizon's Edge plan and AT&T's Next plan (which is a quasi-lease, as you must turn your phone in at the end of the contract period, though you technically "own" it).

Leasing is a bit different. You never own your phone; instead, your carrier owns it and you're simply paying to use it for a set period of time. When your lease is up, you turn your phone in and upgrade to a new device. You also have the option to purchase your phone.

Buying pros and cons

ProsCons
You own your phone once it’s paid forHigher upfront fees
You can resell your used phone for cash or creditHigher monthly fees
Financing options availableHigh early termination fees
Trade-in device to take advantage of carrier promotionsInfrequent upgrades

Leasing pros and cons

ProsCons
No upfront feesMust be returned in good condition (customer liable for damages)
Lower monthly paymentsCannot resell or trade-in phone for cash or credit
Frequent upgradesOnly available for top smartphone models
Option to purchase after leaseCan only terminate agreement upon paying the balance of both the lease and the phone

In addition to these general pros and cons, each program has its own nuances. For example, T-Mobile's JUMP! On Demand lets you upgrade your device up to three times per year (though your lease will start over every time you upgrade), while Sprint Lease only allows you to upgrade every two years – or in one year if you pay an additional $10 monthly fee.

When you buy your smartphone, you can only upgrade every two years on two-year contracts. Financing plans often offer upgrades at one year, though you have to pay off the balance before you can upgrade (though some plans allow you to upgrade once you've paid off 50 percent of the balance, provided you also trade your phone in).

Smartphone leasing versus buying: Which is cheaper?

When it comes to the major carriers, the three things customers prioritize are coverage, upgrade eligibility, and price. The following compares leasing or buying two popular smartphone models – the iPhone 6 and Galaxy S6 – on the Sprint and T-Mobile lease programs versus popular buying options.

iPhone 6 16GB

Sprint LeaseSprint Easy PaySprint ContractT-Mobile JUMP! On DemandT-Mobile JUMP!Verizon EdgeAT&T Next
Upfront Cost$0$52 in tax$199 + $16 tax$0$0$0$0
Phone Payment and Plan$20 + $60 Unlimited Plan = $80$27 + $60 Unlimited Plan = $87$0 + $85 Unlimited Plan = $85$27 + $60 Unlimited Plan = $87$27 + $80 Unlimited Plan = $107$27 + $84 Unlimited with 4GB Data Plan = $112$22 + $65 Unlimited with 3GB Data Plan = $87
Two-Year Cost$1,920$2,142$2,256$2,088$2,568$2,688$2,088

Galaxy S6 32GB

Sprint LeaseSprint Easy PaySprint ContractT-Mobile JUMP! On DemandT-Mobile JUMP!Verizon EdgeAT&T Next
Upfront Cost$0$52 in tax$199 + $16 tax$0$0$0$0
Phone Payment$20 + $60 Unlimited Plan = $80$27 + $60 Unlimited Plan = $87$0 + $85 Unlimited Plan = $85$28 + $60 Unlimited Plan = $88$28 + $80 Unlimited Plan = $108$25 + $85 Unlimited with 4GB Data Plan = $110$23 + $65 Unlimited with 3GB Data Plan = $88
Two-Year Cost$1,920$2,142$2,256$2,112$2,592$2,640$2,112

Depending on the plan you need, in most cases leasing a new smartphone is cheaper than buying. However, this doesn't take into consideration the resale value of your phone.

Smartphone resale values

Checking Flipsy.com, we can see that a used 16GB iPhone 6 in "good" condition on the Sprint network is worth $416 on the private market; that same device on the T-Mobile network is worth $546. A Galaxy S6 on the Sprint network nets $371, and you can sell a T-Mobile model for $429. The fact that you have to turn in your leased smartphone means you cannot resell it like you can a phone you buy. Let's see how the total net works out if you decide to sell your used smartphone.

Sprint Contract Two-Year CostResale ValueNet Cost Sprint with ResaleSprint Lease Two-Year CostT-Mobile JUMP! Two-Year CostResale ValueNet Cost T-Mobile with ResaleT-Mobile Lease Two-Year Cost
iPhone 6$2,256$416$1,840$1,920$2,568$468$2,100$2,088
Galaxy S6$2,256$371$1,885$1,920$2,592$582$2,010$2,112

When you take resale value into account, buying ultimately ends up being the better deal in most cases (save for the T-Mobile iPhone 6 by $12). Of course, these numbers are dynamic and are subject to change according to the plan and options you select. In addition, they do not take into consideration the cost of insurance – a good idea if you're leasing, since you're liable for any device damages.

Generally speaking, a lease might be a good option for you if:

  • You want to avoid an upfront payment
  • You plan to stick with your current carrier indefinitely
  • You want to upgrade your device one to three times per year

Buying might be a good option for you if:

  • You can use the same phone for two or more years (or are willing to pay off the balance)
  • You want to resell or give away your old device
  • You want more freedom to switch carriers (and take advantage of special new-device promos)

Whether you decide to lease or buy your next smartphone, you can offset some of the cost when you sell your current phone via Flipsy.com.

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