You’ve seen the latest iPhone, Samsung Galaxy, or Google Pixel and you want it.

So you search your favorite site or call your carrier to see how much it will run you… And after a few seconds of disbelief, you realize that this phone will cost…

A lot…

But you still want it. So what are your options?

Chances are you must pick between:

  • Buying
  • Leasing
  • Financing

Each of these approaches come with unique pros and cons. If you’re curious which is the best for you, we’re about to cover everything you need to know to find the perfect balance of upfront savings, long-term costs, and flexibility.

Let’s look at the pros and cons of each…

Buying Outright

If you have the budget, buying outright is almost always the best option.

But it’s also the one that will require you to come up with the most cash up front.

Before you pay in full for an unlocked phone, consider these points.



No financing or leasing fees


Freedom to switch carriers


Access to cheaper monthly plans


You can resell your phone -- or pass it on to friends and family -- if you upgrade



You must pay the full cost upfront


Getting the best value for your phone later means selling it yourself

As you can see, the pros by far outweigh the cons. But the first con, paying upfront, is big -- particularly if you have a tight budget or like to upgrade often.

Phone Leasing (AKA: Early Upgrade Plans)

Leasing is one of the most popular ways of getting a new phone or upgrading an existing one.

Some service providers call them “early upgrade plans” but they’re still just a lease. And in the right situation, leasing is an excellent option.

But consider these points before signing any lease agreements to avoid future surprises.



No worries about reselling your phone


Affordable deposits and monthly payments


Flexible payment terms


Purchase options upon lease completion


Frequent upgrade “discounts”



Can turn into a cycle of never-ending payments


Locks you to a specific service provider


Can’t resell your phone unless you pay the full balance


Can cause issues if your phone is lost, stolen, or damaged


Credit inquiry will appear on your credit report

Leasing is tricky because it gives your carrier the advantage.

You pay off the full retail price over a set period -- often 24 months. Once you’ve paid the balance on your phone in full, it will no longer show up on your phone bill.

But that’s where they get you…

If you keep using early upgrades, your balance is never paid in full.

So the fee stays on your bill until you stop jumping for the next upgrade to come along.

While you’re not officially tied to the carrier, you can’t use your phone elsewhere unless you pay the remaining balance in full…

With leases, you’re essentially paying to borrow a phone unless you pay the full balance of the phone before upgrading.

With that said, if you like to upgrade often, are happy with your carrier, and don’t want to deal with the hassle of selling your old phone to offset the price of a new one, leases can be a decent deal.

Just be sure you understand how leases work, read the fine print regarding fees, the length of your lease agreements, and any additional services you might need to sign up for -- such as phone insurance -- before agreeing to anything.

Phone Financing (AKA: Equipment Installment Plans)

Financing is less common in some areas but still a valid way to make the latest smartphones more affordable. Some carriers now call them “equipment installment plans” or similar names.

Essentially, instead of paying for a set term and then trading in your phone for a new one, you can pay off the full balance and own it when you’re done. You won’t always find the early upgrade options found in leasing plans, but pricing is typically similar to leasing.

You can also use a credit card or check for financing plans with local electronics or phone retailers.

Regardless of the way you finance your phone, you’ll want to keep these points in mind.



The phone is yours after you pay the full balance


Minimal deposits and affordable payments



Locks you to a specific service provider


Can’t resell your phone unless you pay the full balance


Can cause issues if your phone is lost, stolen, or damaged


Financing fees can add to the final price of your phone


Credit inquiry will appear on your credit report

Phone financing comes with many of the same concerns as leasing. However, if you’re not the type to upgrade often -- or want to avoid the temptation -- it might be a better way to access affordable payments on a new smartphone.

The biggest consideration to keep in mind is fees. If you use your credit card, there will be interest involved that could add up quick -- especially if you finance multiple phones.

Even if you finance through a service provider or retailer, there’s a good chance they’ll tack on fees.

Be sure you understand how these fees add to the cost of owning the phone.


As long as you have the budget to do so, buying your phone outright is always the best option.

You have fewer limitations, lower long-term costs, and can just sell your used phone when it is time to upgrade.

If you must finance, be sure to check any additional fees. While it might make the phone more affordable upfront, you could be seriously overpaying before the phone is yours.

Frequent upgraders might find leasing a better fit. Just be sure to read the fine print so you understand any obligations you might have before committing.

P.S. Ads on TV and online make the latest phones look super amazing. But there is a good chance any top-tier phone from the past two or even three generations will meet your needs. Want better prices without payment hassles? Our guides on refurbished cell phones and used smartphones discuss other smart ways to save.

[1] The Post and Courier : Pros, Cons of Leasing vs. Buying a Smartphone
[2] Tom's Guide : Should You Lease or Buy Your Next Smartphone?
[3] Zero to Thrifty : Leasing vs Buying Cell Phones
[4] How-To Geek : Lease vs Finance vs Buy: How Should You Pay for the iPhone 8 or X?
[5] The New York Times : Why Leasing a Smartphone May Be Better Than Buying One
[6] Time Magazine : Why You Should Never Sign a Cell Phone Contract Again
[7] Lifehacker : So, Are You Going to Buy or Lease Your Next Phone?
[8] Ken's Tech Tips : Handset Financing Options: Alternatives To The 24-Month Contract
[9] The Simple Dollar : Why a Leased Smartphone Is a Dumbphone

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