Did you want to set up a payment plan for that?

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investingdad
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Did you want to set up a payment plan for that?

Post by investingdad » Mon Nov 13, 2017 9:46 am

I had to replace my cell phone over the weekend. Didn't want to, but the operating system is no longer compliant with our IT security policy at work. They should pay for that, but that's another topic...

Anyway, I got another Android that I liked. As the guy starts the checkout process, the first question was...did you want to set up a finance plan for that?

No, no I don't. But clearly many do....I guess buying a phone is now starting to look like buying a car.

livesoft
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Re: Did you want to set up a payment plan for that?

Post by livesoft » Mon Nov 13, 2017 9:48 am

I bought a new cell phone. The payment plan was 0% interest. There wasn't even a credit check.
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goingup
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Re: Did you want to set up a payment plan for that?

Post by goingup » Mon Nov 13, 2017 10:11 am

No, I pay cash for a car, but finance the phone. :D The difference is I get a monthly bill from Verizon anyways so folding in the cost of the phone (at zero interest) makes no difference to me. When I pay cash for car I do it so I won't get a monthly bill.

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DaftInvestor
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Re: Did you want to set up a payment plan for that?

Post by DaftInvestor » Mon Nov 13, 2017 10:16 am

Same as others that replied - since financing phones is 0% - I always finance it.
(Personally investingdad I agree with you on the side-point that if you are required to have a phone for work - work should pay for it. This is one of my pet peeves as well - my company will pay for my monthly plan but not for my device. They should either issue devices or allow an allowance or allow you to expense it. I personally used to like the older Verizon/etc plans whereby they would charge you double what they do now for monthly access but based upon a 2-year contract and a huge discount on the latest smart-phone - it would allow me to charge more of the expense to my employer than I can now.)

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deanbrew
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Re: Did you want to set up a payment plan for that?

Post by deanbrew » Mon Nov 13, 2017 12:35 pm

goingup wrote:
Mon Nov 13, 2017 10:11 am
No, I pay cash for a car, but finance the phone. :D The difference is I get a monthly bill from Verizon anyways so folding in the cost of the phone (at zero interest) makes no difference to me. When I pay cash for car I do it so I won't get a monthly bill.
Exactly. Why pay the full price of the phone upfront when they allow you to pay it off over 18 or 24 or 30 months with no interest on your regular monthly bill?

Now, I have declined payment plans for furniture and appliances even when they offer 0% interest because there is a big gotcha where they charge all of the forgiven interest if you somehow forget to pay off the loan in time. No gotchas with the cell carriers that I see.
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flamesabers
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Re: Did you want to set up a payment plan for that?

Post by flamesabers » Mon Nov 13, 2017 12:47 pm

All of the Android phones I've purchased have been under $100. There is no reason or advantage to finance the Android phones I get. :)

chevca
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Re: Did you want to set up a payment plan for that?

Post by chevca » Mon Nov 13, 2017 12:51 pm

DW and I got new phones this year and did the payment plan. Normally I don't like to finance anything like a phone. But, I didn't see any gotchas, they worked the numbers right in front of us and the price was the same either way, and we can pay them off anytime if we choose to. We didn't go cheap on the phones, so I figured why pay it all now when it can just be part of the monthly bill?

Longdog
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Re: Did you want to set up a payment plan for that?

Post by Longdog » Mon Nov 13, 2017 1:03 pm

I pay “cash” on a credit card that doubles the manufacturer warranty. On an iPhone that gives me two years of coverage. In the past, I’ve had minor problems with the screen that I had repaired before the doubled period was over, and got reimbursed for the repair. Definitely a much better deal than 0% interest. Buying it as a single purchase on the credit card made it quite easy to provide the necessary documentation, should a claim need to be made. Not sure how easy that would be if the phone charge was co-mingled with the service charge, especially if you paid your cellphone bill with different payment options over time.
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wrongfunds
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Re: Did you want to set up a payment plan for that?

Post by wrongfunds » Mon Nov 13, 2017 5:30 pm

And if the phone was a "free upgrade" e.g. iPhone7 from iPhone6, your credit comes in at 1/24 per month which effectively locks you in 2 year contract!

livesoft
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Re: Did you want to set up a payment plan for that?

Post by livesoft » Mon Nov 13, 2017 9:27 pm

wrongfunds wrote:
Mon Nov 13, 2017 5:30 pm
And if the phone was a "free upgrade" e.g. iPhone7 from iPhone6, your credit comes in at 1/24 per month which effectively locks you in 2 year contract!
At least on the payment plan I have, one can pay it off early at any time with no penalty.
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goodlifer
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Re: Did you want to set up a payment plan for that?

Post by goodlifer » Mon Nov 13, 2017 11:35 pm

We bought a pair of Samsung S8's not too long ago. I forgot the exact amount, but it was in the $450 range per phone if we chose monthly payments and the full $700 each if we paid cash. I made one monthly payment and then paid them off. It doesn't makes sense to me why they would structure the pricing that way, especially since there was no interest or prepayment penalty.

denovo
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Re: Did you want to set up a payment plan for that?

Post by denovo » Tue Nov 14, 2017 3:30 am

livesoft wrote:
Mon Nov 13, 2017 9:48 am
I bought a new cell phone. The payment plan was 0% interest. There wasn't even a credit check.

Same here. So I took it. Just 24 payments added to Verizon bill.

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djpeteski
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Re: Did you want to set up a payment plan for that?

Post by djpeteski » Tue Nov 14, 2017 6:38 am

We needed a mattress a couple of years back. The sales guy could not imagine anyone with the ability to pay cash for a ~$1000 mattress. Whatever.

blueman457
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Re: Did you want to set up a payment plan for that?

Post by blueman457 » Tue Nov 14, 2017 6:56 am

I pay upfront for cellphones (despite the 0% financing) for the credit card warranty extension.

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oldcomputerguy
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Re: Did you want to set up a payment plan for that?

Post by oldcomputerguy » Tue Nov 14, 2017 11:08 am

I have had two phones with Consumer Cellular. First was an Android-based Samsung, second was (and is) an iPhone SE. Paid cash up front for both.
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asset_chaos
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Re: Did you want to set up a payment plan for that?

Post by asset_chaos » Tue Nov 14, 2017 5:19 pm

I figure anything they're pushing me towards is meant to somehow, on average benefit the company at my expense. Since I don't want to spend time to figure out where the 'gotcha' might lie, I always decline such offers.
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bigred77
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Re: Did you want to set up a payment plan for that?

Post by bigred77 » Tue Nov 14, 2017 5:30 pm

I'm a little surprised at the replies here.

Yes, Bogleheads, with their generally high incomes and generally high savings rates can just eat $200 - $1000 expenses in stride. Just write a check or swipe your credit card and pay the bill at the end of the month.

A huge chunk of this country does not have the ability to do so. That's why you see payment plans for products in this price range. Those people want to buy cell phones and mattresses and appliances as well. Companies provide financing in order to remove a barrier to purchase and sometimes to create an additional profit center as well.

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deanbrew
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Re: Did you want to set up a payment plan for that?

Post by deanbrew » Tue Nov 14, 2017 6:03 pm

bigred77 wrote:
Tue Nov 14, 2017 5:30 pm
I'm a little surprised at the replies here.

Yes, Bogleheads, with their generally high incomes and generally high savings rates can just eat $200 - $1000 expenses in stride. Just write a check or swipe your credit card and pay the bill at the end of the month.

A huge chunk of this country does not have the ability to do so. That's why you see payment plans for products in this price range. Those people want to buy cell phones and mattresses and appliances as well. Companies provide financing in order to remove a barrier to purchase and sometimes to create an additional profit center as well.
Absolutely true. While some can afford to pay the whole cost upfront, many people cannot. So, financing is necessary to achieve the sales volumes that the manufacturers and carriers want.

Using a credit card to get the rewards and warranty extension is a legitimate reason to pay upfront, but not if you can't afford to pay the credit card bill in full before interest charges kick in.
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Daryl
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Re: Did you want to set up a payment plan for that?

Post by Daryl » Tue Nov 14, 2017 7:06 pm

djpeteski wrote:
Tue Nov 14, 2017 6:38 am
We needed a mattress a couple of years back. The sales guy could not imagine anyone with the ability to pay cash for a ~$1000 mattress. Whatever.
A couple I know were in the market for a new home. They had a meeting with the builder and he was going through the different lots that were available, options/finishes, etc. Then he began to discuss mortgage options. This couple winked at each other, knowing full well that they were not going to be setting up a "payment plan" for a new home. To say that they have been living below their means for quite a while would be an understatement.

Radjob4me
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Re: Did you want to set up a payment plan for that?

Post by Radjob4me » Wed Nov 15, 2017 1:27 pm

I am always surprised by the number of folks on these boards that like to pay cash for everything. While I understand not using credit cards and higher interest loans, not taking advantage of 0% or similar financing seems odd to me personally.

Case in point - 12 months ago I bought a new Volvo S60 - I drive alot and enjoy their cars. The dealer clearly wanted to sell the vehicle as the final cost was under invoice. While I could have paid cash, the deal at the time was that Volvo would also make the first three payments, so I financed the whole thing at 1.9% for 48 months (I asked to do less, like 24 months, but at least they were smart enough to say no to that). And the dealer rep did the old side of the mouth whisper that they could care less if someone pays cash - they usually get a bonus if the get buyers to finance, so the cash deal - at least on a new car - holds little sway these days

After the first three payments, I was already ahead - my effective interest rate over 48 months was less than zero. Then I kept the balance in my usual investments and those were up over 10% this year (fairly conservative stock/bond mix), which was another few thousand earned towards the car price. So while yes I got lucky with this years returns, even just taking the 0% (or better) financing and earning interest in a savings account or CD is inherently a better deal than just paying cash to avoid getting a bill in the mail (or online in my case - no stamps)...

So yes, we also use the 0% Verizon phone deal too.

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