Leasing vs. Buying a Phone

Let’s get straight to the point: cell phones are expensive, and choosing the best way to buy one can be a daunting task—but it doesn’t need to be that way.

Most carriers allow for a multitude of ways to purchase a cell phone, from outright purchasing to monthly payments, and even leasing options (with select carriers). This article will tell you everything you need to know in order to make the best decision when shopping for your next phone.

Purchasing MethodProsCons
Outright PurchaseNo increases in monthly billNew phones can be pricey
Bigger upfront cost
Not as many discounts
Monthly Installments Usually interest-free
Manageable monthly payments
Better deals compared to outright purchases
Higher monthly bill
Must pay off full cost of phone before switching carriers
Leasing Upgrade regularly
Cheaper overall
Better deals compared to outright purchases
Don’t own your phone at the end of the lease; required to pay a buyout price to keep phone

Difference between leasing and buying a phone

Unsurprisingly, one of the biggest differentiators between leasing and buying a phone is pricing. And while you’ll find that leasing a phone generally costs you less over the long-term, you have to remember that you won’t own the phone at the end of the lease unless you pay a buyout cost. Still, there are other factors to consider when picking the right approach.

Reasons to buy a phone instead of lease

If you like the idea of owning your cell phone, buying it will likely be your best course of action. Most carriers will allow you to either buy your phone outright or buy it on monthly installments, in which case the full retail price of the phone is broken up into smaller, more manageable monthly payments. Depending on the carrier and your credit history, the monthly installments may be interest-free, which is always good news. Another advantage of buying your phone is you have the choice to unlock your phone to use it with any compatible network. That said, if you bought your new phone on monthly installments, you have to pay off your phone before switching to a new carrier—whether that means waiting out the installment period or paying off the rest of your term in one lump sum.

Is it better to buy a phone outright or on monthly installments?

Deciding whether to purchase your phone upfront or on a monthly payment plan depends primarily on your financial flexibility. Buying a phone outright gives you peace of mind in knowing that it is paid in full and also allows you to take full advantage of having no contract, should you ever decide to switch carriers. That said, the costs of today’s cell phones can easily reach the $1,000 mark and higher—this is why most of us tend to opt for monthly installments, as the phone is ultimately the same price, albeit, broken up over the course 24 months or more.

iPhone 11 (64GB) price comparison
Payment typeMonthly costsUpfront costsTotal costs
Verizon monthly installments$29.16/month for 24 months$20$699.84
T-Mobile monthly installments$29.17/month for 24 months$10$700.08
AT&T monthly installments$23.34/month for 30 months$30$700.20
Visible monthly installments$29/month for 24 months$0 (depending on credit)$696
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Callout: Note that we didn’t include Sprint in the table above. That’s because with Sprint, you can’t buy your new phone on monthly installments. You can either purchase it outright or lease it.

Other ways to buy a phone

While buying a phone directly from carriers is the preferred approach for many, you can purchase a phone through manufacturers and retailers, such as:

  • Best Buy
  • Target
  • Apple
  • Samsung
  • Amazon
  • Google

Many of the aforementioned retailers have a wide selection of cell phones available—both old and new—and even sell refurbished devices in “like new” condition. Buying a phone from a manufacturer or retailer also gives you the freedom to take your phone to any carrier that you want, without worrying about network compatibility issues.

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Note: refurbished device quality tends to vary from vendor to vendor, depending on factors such as quality control and transparency regarding device condition.

Reasons to lease a phone

If you find yourself wanting a new phone every year or so, leasing may be a good option to consider, as you can simply upgrade your phone at the end of your lease or opt for an early upgrade through exclusive programs like Sprint’s Flex Lease.

Leasing also helps you save money in the long run if you like to upgrade your phone regularly. For example, if you lease the iPhone 11 through Sprint’s Flex Lease, you’ll only wind up paying $525.06 in total, compared to the $700 cost through competitors.

Leasing a phone is similar in concept to monthly installments, as you pay a specified amount per month—the main difference between the two is that you won’t keep the phone at the end of a lease, whereas the phone is yours when paid for through monthly installments.

Keep in mind that, with leasing, you have the option to buy your phone at the end of the lease, although you’ll likely end up paying more than if you had gone with a monthly installment plan option.

How to lease a phone

Leasing a phone works similarly to leasing other items, such as cars or even property rentals. Regarding phones, you would select a device to lease, pay monthly installments, and return the device at the end of its lease agreement period. In addition, there are also ways to take advantage of “lease to buy” options through third-party programs such as SmartPay Leasing.

Sprint’s Flex Lease

Sprint is the only major carrier that offers its own leasing program: Sprint Flex Lease.

Sprint’s Flex Lease allows you to lease a phone for 18 months, with the options to then:

  • Pay off the remaining balance either in one lump sum payment or via 9 monthly payments (to own)
  • Continue leasing
  • Renew your lease with a new phone.

Additionally, the program gives you the opportunity to upgrade after 12 months of payments, as long as your account is in good standing and your phone is in working order.

Take a look at some of the best plans available with Sprint’s Flex Lease program:

 Leasing vs. buying a phone: which is the right choice?

All in all, leasing vs. buying a phone is a matter of assessing the level of flexibility and savings that you are looking for. If you find yourself itching to get the latest and greatest smartphones time and time again, a lease is probably the best bet for you—as you pay lower monthly amounts and switch phones every 12 to 18 months. But remember, leasing isn’t the cheapest option available if you want to eventually own your phone—in that case, it’s smarter to opt for monthly installments.

Alternatively, buying your phone gives you the chance to own your phone, with most carriers allowing for monthly installments to finance the device. Buying your phone also gives you more freedom to switch to other compatible carriers, as most carriers will assist in unlocking your phone after you’ve had service with them for a specified period of time.