Dirty Secrets of Phone Financing Revealed by Industry Insider

(Newswire.net — May 14, 2018) Hotchkiss, Colorado — A recent article on BestCellular.com by Sam Liedtke tackles an interesting question – is there really a difference between wireless carrier contracts and phone financing plans? An interview with the article’s author reveals his motivations.

Q: I’d like to ask you a few questions about the piece you published entitled, “What They Don’t Tell You About ‘No-Contract’ Phone Financing.”

A: Sure, that sounds great.

Q: Was there a specific moment when you realized this was important information for the public?

A: It really began when I was doing research as an analyst for the Best Cellular site. I saw an ad for one of these leasing plans. I thought to myself, “this can’t be serious.” When I realized it was, I started yelling at the screen – ask my coworker (chuckles). I just can’t believe the audacity of a company to call out carrier contracts, then turn around and trick customers into a worse deal in the same breath.

Q: Are phone financing plans really so bad?

A: Short answer, yes. These agreements can lock people into paying more than double the regular price of a phone. That’s unacceptable. In fact, several states have laws in place to deter this kind of thing. It’s commonly called “usury” when a company charges these outrageous financing rates. As someone who works in the industry, I can’t stand these tactics. There’s making money, and then there’s cheating people, and those don’t have to be the same thing.

Q: You mentioned that financing is a worse deal than carrier contracts. Would you mind elaborating?

A: Sure. First, there’s the old standby, the 2-year carrier contract. The carrier gives you a “free phone” and you promise to do business with them on that phone for the next 24 months. There’s all kinds of variations out there, but that’s the basic idea. Many times you didn’t actually pay anything extra for the phone. Companies fold the overhead cost of new devices into their monthly pricing. With phone financing plans, it’s basically a bait-and-switch. You’re told that contracts are “bad” and there’s a better alternative. Then you get locked into a lease term to pay off the full cost of the phone. But, they charge you crazy high-interest rates. And, you’re only able to use that phone with the carrier who partnered with the financing company. So you might pay 200% for the phone and you’re stuck with that carrier for at least 15 months anyway. How is that not considered a contract?

Q: For full disclosure, you work for a prepaid cell phone carrier who also sells handsets. What’s your stake in all this?

A: Look, I’m not gonna lie, I wrote the article when I was feeling a bit… passionate, shall we say (chuckles). Wireless companies using what amounts to false advertising make us all look bad. In the past several years, some of the biggest names in the cellular industry have paid off millions in fines due to “deceptive advertising.” They don’t care! They know they can make up the difference and more through all the customers they get through that marketing campaign. I feel like it’s time somebody “on the inside” started calling them out on it. I took a break from the wireless industry after about five years because these misleading practices are rampant. I joined Best Cellular when I saw that their values emphasize integrity and the customer’s best interest. This piece was pretty much a personal project that I’m glad the company let me work on.

Q: What alternatives would you suggest for consumers who can’t afford a new phone at retail pricing?

A: There are lots of options out there. Our company stocks new devices. But we also offer refurbished and certified pre-owned phones because we know that people don’t always have $1000 lying around for the latest iPhone. I’ve bought used devices online myself many times. You have to be careful. Make sure it’s a seller with a good rep, check the model number, etcetera. It’s a bit easier for me because I know what to look for. If you’re set on the latest greatest thing, you’re gonna have to pay for it one way or another. I just want people to know that many companies out there will take advantage of your FoMO. Do your homework before signing the dotted line.

Sam Liedtke is currently a staff writer and research analyst at BestCellular.com and has worked in the wireless industry for over 6 years. Sam has a passion for technology and helping others understand it better.