Purchasing a New iPhone? Here’s How You Can Pay For It

A few years ago carriers stopped offering a subsidy (usually a few hundred dollars off) when you agreed to sign a new two-year contract with them. When the carriers moved to the monthly payment plans, Apple got in the game too. Now you have multiple options for how you want to finance this $$$$ new iPhone. With multiple options comes multiple questions so I’ve addressed the FAQ to hopefully clarify somethings before you pull the trigger on your next big purchase. If you’re paying for your new iPhone in full, upfront (wow – hello cashflow), check out some of my other posts as none this pertains to you. 


Apple Payment Plans v. Carrier Payment Plans

Decisions Decisions. The first thing you need to decide is if you want to finance your new phone through Apple (Citizens Bank) or your Carrier (AT&T Next or Verizon only). In the end the phone costs exactly the same amount regardless of who you decide. The biggest drawback to financing through AT&T is your locked in contract with them for 24 or 30 months. Whereas Apple’s Plans and Verizon allow you to transfer carriers mid contract. My two cents: data plans change so rapidly I wouldn’t want to be locked into a carrier contract if I don’t have to.


Financing Through Apple

Apple offers two options: Apple iPhone Upgrade Program and Apple iPhone Installment Payments. The difference between the two can be confusing. With both options you will own the phone once it’s paid off in either 24 payments or sooner if you choose to pay it off faster. Once you’ve paid it off the monthly charge comes off your bill. You are only eligible for the upgrade program if you’re purchasing a new iPhone XS, XS Max, or XR. If you’re purchasing the iPhone 8, iPhone 8 Plus, or iPhone 7 (please don’t buy the 7) you could finance through the Installment Payment Plan.

Upgrade Program or Installment Payments?
The upgrade program is essentially going “all in.” Your monthly payments are spread out over 24 months, include AppleCare+ (more on that below), and allow you to upgrade after 12 payments or after the phone is half paid off. If, at that time, you choose to upgrade you sign a new 24 month upgrade program contract with Apple and start all over. If you choose to keep the phone after paying it off, you own it.

The installment payments plan also spreads your monthly payments over 24 months. However, it does not include AppleCare+ and does not allow for an upgrade until you have made all the payments and own the phone.

If you’re purchasing a new XS, XS Max, or XR and plan to also purchase AppleCare+ you’re best option is to do the Upgrade Program. The cost is the same once you add AppleCare and you have flexibility to upgrade should you choose.

How Much Will The Upgrade Program Cost Me?
Here’s how it looks after 24 monthly payments:

iPhone XS with AppleCare+

  • 64GB: $49.91/mo ($1,198 total)
  • 256GB: $56.16/mo ($1,348 total)
  • 512GB: $64.50/mo ($1,548 total)

iPhone XS Max with AppleCare+

  • 64GB: $54.08/mo ($1,298 total)
  • 256GB: $60.33/mo ($1,447 total)
  • 512GB: $68.66/mo ($1,647.84 total)

iPhone XR with AppleCare+

  • 64GB: $37.14/mo ($898 total)
  • 128GB: $39.50/mo ($948 total)
  • 256GB: $43.66/mo ($1,048 total)
How Much Will an iPhone 8/8Plus Cost Me on the Installment Plan?
Here’s how it looks after 24 monthly payments:

iPhone 8

  • 64GB: $24.96/mo ($599 total)
  • 256GB: $31.21/mo ($749 total)

I strongly recommend purchasing AppleCare+ 

What Do I Need In Order to Finance Through Apple?
You’ll need to have a valid U.S. credit card, (presumably) decent credit, and whoever is paying for it needs to be over the age of 18. This is because technically you’re signing up for a 24-month interest-free loan from Citizens One—via Apple’s retail stores—so you need all the necessary requirements a company would usually require for a financing deal. Citizens One will run a credit check to approve you for the loan.

If you’re just joining the iPhone Upgrade Program for the first time, Apple does not provide pre-approval for the iPhone Upgrade Program. Instead, you’ll have to go through the process during your pre-order stage on Sept 14. Don’t worry, though. You won’t be kicked to the back of the line while the approval process takes places. Your iPhone will be placed on hold for you until the process is complete.

I'm Already On The Upgrade Program, What Do I Do?
In order to expedite the process of getting your new iPhone, Apple has implemented a pre-approval feature that is already underway for returning buyers currently enrolled in the iPhone Upgrade program.

If you’re currently enrolled in the iPhone Upgrade Program, navigate to Apple.com and visit the iPhone section. Select the model, carrier, color, and capacity you want to upgrade to. When you get to the step where you’re asked, “How would you like to pay?” select the iPhone Upgrade Program, and then select I’m already part of the program. You’ll then begin the pre-approval process.

A Note About Credit Report Pulls

There’s been a lot of confusion about whether Apple does a hard or soft pull on your credit report to approve you for re-enrollment. That’s because each candidate for a loan is different. Apple’s iPhone Upgrade Program overviewstates:

Citizens One reserves the right to perform a credit inquiry as needed to determine loan eligibility. Depending on your account performance and transactional history in the iPhone Upgrade Program, Citizens One may approve your new loan application without your credit being affected.

Basically, Citizen One, the banking organization Apple works with to process loans, may only do a soft pull on your credit report if it considers your previous activities in the iPhone Upgrade Program to be in good standing. If, however, Citizen One deems it necessary to research further into your credit data, it might do a hard pull.

A note about credit freezes

If you’ve put a credit freeze on your credit report, there are a few things you should know about applying for your iPhone Upgrade Program loan.

A credit freeze is a way for you to restrict access to your credit report to protect you from identity theft. If you’ve put a freeze on your credit report, it doesn’t affect your credit score or keep you from being able to apply for loans. There are some caveats though.

  • If you are already signed up with the iPhone Upgrade Program, Citizens One will still be able to access your credit report for a soft check. The Federal Trade Commission states:

    Your report can be released to your existing creditors or to debt collectors acting on their behalf.

  • If you are joining the iPhone Upgrade Program for the first time, you can still have Citizens One run a credit check, but you’ll want to first temporarily lift the freeze specifically for the credit report agency Citizen One will request your report from (either Equifax, Experian, or TransUnion), but there is a fee. The Federal Trade Commission states:

    If you opt for a temporary lift because you are applying for credit or a job, and you can find out which credit reporting company the business will contact for your file, you can save some money by lifting the freeze only at that particular company.

The credit report agency must lift the freeze within three business days of your request.

To find out which agency Citizens One will request your report from, call them at 1-888-201-6306. If you are unable to get this information, you can temporarily lift the freeze for all three agencies, but you’ll have to pay the fee for each one. Fees range in price from $5 to $10 but are different in each region.

Here are the numbers for the U.S. credit report agencies:

  • Equifax — 1-800-349-9960
  • Experian — 1‑888‑397‑3742
  • TransUnion — 1-888-909-8872

You’ll need to provide your name, address, date of birth, Social Security number and some other personal information.

How Do I Sign Up For The Upgrade Program?
You can either buy your iPhone online, use the Apple Store app, or head down to your local Apple Store and buy your iPhone in-person. If you’d like to make an in-store reservation, visit Apple’s website, choose the iPhone model you want (if available) and go from there.
Can I Have Two iPhones on the iPhone Upgrade Program?
You sure can. Each phone will have its only separate finance contract. So, keep in mind that you’ll have to make two payments every month, even though they’re going to the same place.
Can I Use This As A Way To Finance a New iPhone Even If I Don't Want To Upgrade?
Yup! You have the option to get a new iPhone after 12 payments, but you’re not required to upgrade if you don’t want to. After 24 months, you’ve essentially paid the full price of the device and AppleCare+, and it’s yours to keep.

AppleCare Changes:

AppleCare+ Coverage has always been a tough decision for many. Questioning if it was worth it. When it first was an option it didn’t cover water damage (remember that day my toddler threw my iPhone4 in the washing machine? ugh!). Now that it does, I’d say AppleCare+ is a no-brainer. Remember, on the upgrade program the cost of AppleCare+ is included in the monthly payment. It essentially extends your warranty a second year and bonus – covers you for 2 accidental damage incidents. The fees on those incidents though are going to cost you. Here’s a breakdown:

AppleCare+ & AppleCare+ Theft and Loss Fees
Incident Coverage AppleCare+ Service Fee AppleCare+ with Theft and Loss Deductibles
Screen Damage $29 $29
Any Other Accidental Damage $99 $99
Theft or Loss $199 for iPhone 8, iPhone 7 , iPhone 6s
$299 for iPhone XR, iPhone 8 Plus, iPhone 7 Plus, iPhone 6s Plus
$269 for iPhone XS, iPhone XS Max, and iPhone X

Trade in with Apple GiveBack

Currently own an iPhone and this next purchase is an upgrade? You can trade in your eligible device for an Apple Store Gift Card or a refund on your purchase. If your device isn’t eligible for credit, Apple will recycle it for you for free.

This year they’ve added the option to get a refund on your purchase of the iPhone XS or Apple Watch Series 4. So go ahead and pre-order those shiny new phones today and Apple will issue you a refund once they receive your old phone.

If you buy an iPhone, iPad, Mac, or Apple Watch and pay in full, we’ll apply a refund to your original payment method up to the total purchase price. For any remaining amount, you’ll receive an Apple Store Gift Card via email.

If you buy an iPhone using carrier financing, the iPhone Upgrade Program, or Apple iPhone Payments, we’ll apply a refund to your payment method up to the total amount paid for taxes and fees. For any remaining amount, you’ll receive an Apple Store Gift Card via email.

Curious how much you’ll get for your current hardware? Use Apple’s estimate tool and find out.

Still Confused? Let Me Guide You!

I’m happy to help you figure out which phone is right for you and what payment options you’re eligible for. Connect with me over the phone or email.

2018 Apple Announcements: iPhone XS, XS Max, & XR

Should you buy a new iPhone? This week Apple launched 3 new iPhones: iPhone XS, iPhone XS Max, and iPhone XR. Let’s Explore:

Introducing The Apple Watch Series 4

Beautifully redesigned with breakthrough communication, fitness, and health capabilities. Apple just unveiled an updated Apple Watch that has been re-engineered to help us stay connected, be more active, and mange our health in a powerful new way.  Check out my write up as I highlighted some of the new features.

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