Understanding the pros and cons of mobile phone financing

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Customers who would like to have the best handsets but do not have the money in the UK can still get them and pay later, in a practice commonly known as buying a mobile phone on finance. Handsets are becoming more advanced and expensive, and this option is becoming increasingly popular among many UK subscribers. Opting for financing on one’s mobile phone has its advantages. However, there are scenarios one must be careful against when they choose the mobile phone financing option.

Choice of the latest

For consumers in the UK, mobile phone financing offers them the ability to choose from any mobile device they want. There is no worry about having the cash up front or being able to afford the device. Typically, with a constrained budget, most people have to choose which features to prioritize in their phone options. Budget becomes a way of judging the phone functionality and capability. With the mobile phone financing option, the cost of the phone is spread over at least a yearly period. Many providers of the mobile phone financing service do not require upfront deposits, which further makes it one of the easiest ways for one to own the latest in terms of mobile phone handsets.

Minimum requirements

Mobile phone financing is unlike the other forms of financing in that its minimum requirements are not necessarily as stringent as house or car financing. In most cases one needs only be of legal age, be a resident of the UK and be able to provide proof of regular income. Anyone with good credit will have their requests approved fairly quickly. However, those who do not have a good credit rating can still apply.

Handset depreciation

But all is not rosy when it comes to mobile financing. While they might be expensive, the latest in mobile phone technology depreciates quickly in terms of prices. After their release, the prices almost always fall in a matter of months. For those who choose the mobile phone financing option over, say, an 18 month period, they will still be paying the high price at release, rather than enjoying the low market rates. Major phone manufacturers release newer versions fairly quickly, so if the motivation for choosing the financing option was to own the latest handset, by the time one finishes paying it likely might not be the latest. However, some handset manufacturers offer their customers the chance of upgrading to the latest handset when it is released.

Credit score

When financing one’s phone, there is always the possibility of missed payments over the course of the 12 or maybe 18 month payment period. Just like approval depends on the credit score, non-payment can potentially hurt one’s credit score. Additionally, delaying or missing payments can attract extra fees. The financing process can be lengthy, so make sure to have a steady source of income during the whole process.

Financing is one of the most attractive purchase options today, what with mobile phone prices soaring, and the process being relatively easy, even for a less than attractive credit score. However, one must be very careful to only finance what they need and what they can afford.