iPhone 7 Financing for Fun and Profit

When Apple launched the original iPhone back in 2007, the company’s customers had one option for purchasing the revolutionary device: walk into an Apple Retail or Cingular/AT&T Wireless store, sign a 2-year service contract, and plop down at least $500. Now, on the eve of the iPhone 7 launch nine years later, iPhone customers have a variety of options when it comes to obtaining and paying for Apple’s latest flagship device.

While today’s choice in iPhone purchase and financing options is certainly better than the early days of AT&T exclusivity, the number and complexity of choices can be a bit overwhelming. We’ve therefore set out to explain the various iPhone 7 financing options with the aim of helping you make your purchasing decision.

Although the iPhone is more popular than ever internationally, note that we’re only looking at U.S. prices and carriers. See below for an overview of each iPhone 7 financing option, with a handy summary chart at the end.

Apple iPhone Upgrade Program

First introduced in 2015 alongside the launch of the iPhone 6s, Apple’s iPhone Upgrade Program is unique among the other options below in that it includes AppleCare+ protection. This means that you end up paying more, both on a monthly basis and overall, but the total cost works out to that of a full-priced phone and AppleCare+ ($129), spread out over the payment period with zero interest.

Customers in the iPhone Upgrade Program sign up for a 24-month agreement, financed through Apple by Citizens One Bank. This gets you an unlocked model of the latest iPhone of your choice and two years of AppleCare+ protection. If you make all 24 payments, you’ll own the phone outright. After a minimum of 6 months and 12 payments, however, you can trade your iPhone in to Apple, re-enroll for another two years in the Upgrade Program, and receive that year’s latest iPhone. This arrangement mirrors some of the carrier plans and is why Apple advertises its program with the “get a new iPhone every year” slogan.

Monthly prices for the Apple iPhone Upgrade Program start at $32.41 for the 32GB iPhone 7 (total cost of $777.84, plus sales tax) and reach $45.75 for the 256GB iPhone 7 Plus (total cost: $1,098.00). One thing to note about Apple’s program, which also applies to many of the carrier options, is that you’ll need to pay the sales tax on the total cost up front in your initial payment, so keep that in mind when budgeting. Also remember that despite Apple’s user-friendly facade, the Upgrade Program is a financial agreement subject to credit checks and interest penalties should you fail to make timely payments. Check out the Program’s terms and conditions for the complete details.

Apple iPhone Installment Plan

For those looking for a slightly cheaper and simpler option, the Apple iPhone Installment Plan may be the answer. You’re still dealing directly with Apple in this option, but without the yearly upgrade and AppleCare+ aspects.

Basically, Apple is offering customers zero-interest financing (again, through Citizens One) on the full retail price of the iPhone. You’ll get the same unlocked iPhone 7 model of your choice and make 24 monthly payments that equal the full retail price, plus sales tax. As with the iPhone Upgrade Program, you’ll pay the full sales tax up front.

iPhone Installments are a good option for those who just want the iPhone hardware and are ineligible for carrier subsidies. No wireless service contracts, no dealing with carrier salespeople, just the full price of the phone spread out over two years. Monthly prices range from $27.04 for the 32GB iPhone 7 (total cost: $648.96) to $40.37 for the 256GB iPhone 7 Plus (total cost: $968.88).

Verizon Wireless

Big Red no longer offers traditional subsidies and has now moved to zero-interest payment plans and trade-in credits. For both new and existing customers, Verizon offers virtually the same zero-interest financing terms for the iPhone 7 as the Apple Installment Plan. For the 32GB iPhone 7, that’s $27.08 per month for 24 months (which works out to $649.92), while on the other end of the spectrum the 256GB iPhone 7 Plus will run you $40.41 per month (total cost: $969.84).

Keep in mind that these prices are just for the phone itself. You’ll still need to tack on a Verizon service plan to actually use the thing. And, just like all of the other financing options, you’ll need to pay the full sales tax up front. In Verizon’s favor compared to the other carrier options is that the iPhone is unlocked, so that’s one less thing to worry about if you want to sell or jump ship down the road.

For customers who already own certain iPhone models, Verizon offers a trade-in option worth up to $650. Those with an iPhone 6, iPhone 6 Plus, iPhone 6s, or iPhone 6s Plus can opt to trade their working and good-condition device in to Verizon when purchasing a new iPhone 7. The carrier will then credit your account $27.08 per month for 24 months. For the 32GB iPhone 7, this covers the cost of your phone over the two year payment plan, minus taxes and interest (which makes the total package worth far less than $650 from the customer’s perspective). For higher end models, this acts as a subsidy on your monthly payments.

The key factor for the Verizon trade-in program, however, is that you must maintain service with the company for 24 months. If you switch to another carrier after, say, 12 months, Verizon won’t pay out the remainder of what it owes you on the trade-in. Therefore, only go this route if you’re sure that you’ll stick with Verizon for the long haul. Otherwise, you’re better off selling your existing iPhone on your own and using the cash to offset the cost of your upfront or monthly payments.

Finally, Verizon offers something similar to Apple’s iPhone Upgrade Program with its Annual Upgrade Program. Customers with select recent smartphones (iPhone 6s and newer, Samsung Galaxy Note 7* and Galaxy S7), can trade their devices in after a minimum of 30 days and 50 percent payment and re-up with a new device and new agreement. This isn’t an entirely clean transaction, however, as you’ll need to pay upgrade and activation fees for the new device.

*If it’s not on fire.

AT&T

AT&T was the first major carrier to move away from traditional subsidies, and they continue along that path with “Next” and “Next Every Year” options for the iPhone 7.

AT&T Next is based on a 30-payment schedule, so the monthly costs will be lower, but users will need to make at least 24 of those payments to upgrade. Like the other financing options presented here, there’s no interest if all payments are made in a timely manner. If you like the standard Next plan but don’t want to wait two years, you also have the option to make a down payment to both lower your monthly payment and become eligible for an upgrade sooner.

Monthly prices for AT&T Next plans range from $21.67* for the 32GB iPhone 7 (total cost: $649.99) to $32.34* for the 256GB iPhone 7 Plus ($969.99), plus taxes which, again, are paid upfront.

AT&T Next Every Year is similar to the financing options from Apple and Verizon. Customers agree to 24 monthly payments, and can trade-in and re-up after only 12 months. Next Every Year prices range from $27.09 per month for the 32GB iPhone 7 ($649.99) to $40.42 per month for the 256GB iPhone 7 Plus ($969.99), plus taxes.

Like Verizon’s plans, you’ll need to maintain service with the company in order to keep your interest-free monthly payment schedule. Should you cancel or switch to another carrier, you’ll be required to immediately pay the balance of the phone’s price. Also like Verizon, AT&T is offering the same $650 trade-in option for select iPhones (iPhone 6 or 6s), with the value paid back to the customer in the form of 24 monthly credits.

*For AT&T and T-Mobile, the final monthly payment is slightly lower to bring the total cost to exactly the retail price of the phone.

T-Mobile

The magenta “Uncarrier” has long offered unique service options compared to its competitors, and that continues with the financing options for the iPhone 7. T-Mobile’s financing plan charges customers the same monthly amount for all models of iPhone 7 ($27.09) and iPhone 7 Plus ($32.09), with the difference between the capacities being a down payment ranging from $99.99 (128GB iPhone 7) to $249.99 (256GB iPhone 7 Plus). The entry-level 32GB iPhone 7 requires no down payment. This keeps your monthly bill simpler and easier to calculate, especially for those with multiple devices on a single account.

In addition to the down payment option, users with an existing iPhone can trade in their device for 24-months of bill credits, similar to AT&T and Verizon’s offerings. The iPhone 6 and 6s are worth $649.99 ($27.09 per month), making the 32GB iPhone 7 “free,” while those with an iPhone 5, 5c, 5s, or SE can get up to $399.99 ($16.66 per month) to defray some of the iPhone 7’s cost. Like the other carriers’ plans, you must remain a T-Mobile customer throughout the 24-month financing period to receive the full value of your trade-in, and if you cancel early you’ll be required to pay the balance on your iPhone 7.

In terms of upgrade plans, T-Mobile’s “Jump” and “Jump On Demand” plans offer the same basic package as those from AT&T and Verizon, but with some interesting differences. For the basic 24-month “Jump” plan, users can upgrade once 50 percent of their financed device has been paid off, while “Jump On Demand” lets customers upgrade at any time, up to three times per year, during the 18-month payment plan. Jump On Demand also waives any upgrade fees, which are normally $20 a pop.

Sprint

Rounding out the major carriers is Sprint, which offers the same basic zero-interest financing as its competitors, along with a trade-in option which equates to monthly bill credits. However, the carrier still advertises a traditional contract subsidy option. With a 2-year service agreement, customers can get the 32GB iPhone 7 for $199.99, while the highest end 256GB iPhone 7 Plus will run you $519.99.

In terms of the no-contract financing options, Sprint offers its upgradeable “lease” plans ranging from 18-months at $26.39 for the 32GB iPhone 7 ($475.02) to 17-months at $47.00 for the 256GB iPhone 7 Plus ($799.00). The trade-off with Sprint’s lease is that you get lower monthly and overall payments but you don’t get to keep the device at the end of the term (you’re expected to re-up and upgrade to the latest iPhone at that time). If you prefer keep-it-at-the-end installments, Sprint has those, too, at the same prices as T-Mobile and AT&T (ranging from $27.09 to $32.09 per month).

Finally, Sprint has matched its competitors with a limited-time trade-in offer that will credit you up to $650 over the course of a 24-month financing plan. Sprint customers interested in this offer will need to visit a Sprint store, however, to trade in their existing iPhone 6 or newer.

iPhone 7 Financing Summary

It’s clear from the overviews above that all of the carriers, with a few exceptions, offer the same basic zero-interest deals when it comes to the iPhone 7. So let’s put it all together in a handy chart to highlight the few differences, based on the 32GB iPhone 7:

iPhone 7 32GB
	Apple Upgrade Program	Apple Installments	Verizon	AT&T Next	AT&T Next Every Year	T-Mobile	Sprint Subsidy	Sprint Installments
Unlocked iPhone	Yes	Yes	Yes	No	No	No	No	No
AppleCare+	Yes	No	No	No	No	No	No	No
Upgrade Terms	6 months and 12 payments	N/A	30 days and 12 payments	24 payments	12 payments	12 payments	N/A	N/A
Service Contract	No	No	No	No	No	No	2-years	No
No. of Payments	24	24	24	30	24	24	1	24
Monthly Cost	$32.41	$27.04	$27.08	$21.67*	$27.09*	$27.09*	N/A	$27.09*
Total Cost	$777.84	$648.96	$649.92	$649.99	$649.99	$649.99	$199.99	$649.99

With iPhone 7 financing options practically identical across the major carriers, the most important factor becomes terms and service. As long as you have decent credit and make your payments on time, you’re going to end up paying the retail price for the iPhone 7 under most plans, so the only questions are how long you want to make your payments, when you want to upgrade, and who you want to deal with.

All of the carriers will generally charge activation or upgrade fees when you bring an iPhone onto their networks, even if you buy the phone directly from Apple. Some carriers, like Sprint, are offering limited time activation fee waivers, and other carriers may waive the fees if you’re coming from another carrier or are persuasive enough. At $20 to $30 each, the amount and timing of activation fees is definitely something to consider.

A final consideration is carrier lock status of your iPhone. Both of Apple’s financing options and Verizon’s option give you an unlocked phone right out of the box, while all other iPhones will ship locked to their respective carriers. This may make it easier for you if you’re not sure which network you want to end up with when you order your iPhone 7, but customers can always unlock their iPhones down the road for resale or use on another network. Be sure to note, however, that the iPhone 7 isn’t “universal.” Unlocked iPhones ordered for AT&T and T-Mobile won’t be able to work with CDMA networks. The Verizon and Sprint models, however, are compatible with GSM networks, so be sure to plan accordingly.

Is Apple the Best Option?

With overall iPhone 7 prices pretty much the same across the board, it seems that going with one of the Apple plans is the best choice. After all, why not deal directly with a company known for good customer service instead of one from an industry notorious for terrible service? In reality, the answer may not be so simple.

Apple’s iPhone Upgrade and Installment plans are still very new, and the company is still facing growing pains related to the programs. Specifically, it seems that Apple failed to reserve enough supply to ensure that upgrade-eligible customers who signed up last year could choose their desired model when the iPhone 7 launched last week. Despite attempts by the company to address customer concerns, Apple is already facing a class action lawsuit over the issue.

While it’s easy to chalk this controversy up to high demand, a more cynical possibility is that Apple doesn’t need to ensure adequate supply at launch for its iPhone Upgrade customers, because those customers are committed to a two-year financing agreement and have no choice. Why “waste” available units on customers who are contractually obligated to keep making their monthly payments when those same iPhones could bring new customers into the fold? After all, those upgrade customers will get their iPhone 7’s eventually.

That’s not to say that this is some fiendish scheme by Apple, but the fact is that Apple has no real incentive to serve its iPhone upgrade customers while the carriers do. Therefore, you may have better luck securing your preferred iPhone model via your wireless carrier rather than Apple itself.

Another issue is the aforementioned upgrade and activation fees. Some carriers run promotions in which these fees are waived or reduced, and it’s always worth a shot to try and negotiate a waiver with the carrier’s salespeople. If you buy a phone from Apple, however, you’re definitely going to be paying those fees when you go to activate it on one of the wireless networks.

All of that said, it’s good to see a competitive iPhone 7 financing option from Apple, and hopefully the company’s management of the program gets better over time. But don’t overlook the carrier options entirely.

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