Study: Borrowers buy pricier iPhones

“The introduction of interest-free financing in the U.S. has boosted iPhone 5S sales,” Philip Elmer-DeWitt reports for Forbes.

“Fortune has obtained a study by the Consumer Intelligence Research Partners that found, counterintuitively, that customers who finance an unsubsidized phone tend to buy a more expensive phone,” P.E.D. reports. “In particular, CIRP found, the iPhone 5S accounts for 73% of financed iPhones, compared to 61% of all iPhones.”

P.E.D. reports, “‘The move away from subsidized phones has given an unexpected boost to the iPhone 5S in the U.S.,’ says CIRP’s Josh Lowitz.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]

7 Comments

  1. On these plans if you upgrade to a new phone after a year you don’t keep the phone. So you lose everything you’ve invested into it over 12 months. Not worth it to me.

  2. It is hardly a shock that as the price of something goes up people might want to spread the cost of it. Amazingly people don’t buy houses in one upfront cash payment either.

    Personally I bought my phone on interest free installments because I got a little bit of interest by keeping the money I otherwise would have spent in a savings account, plus my credit score has seemingly now increased as a result. Funnily enough, someone who never pays any charges or interest is not the most attractive of customers to companies.

    1. How about a less intuitively obvious take….if you are on the smarter end of the Apple buying experience such that you would obviously get an iPhone 5s with enhanced abilities vs the iPhone 5c (which is a plastic version of last year’s iPhone 5 in all regards), then maybe you’re also smart and disciplined enough to opt into an arrangement whereby someone else finances your purchase interest-free as well.

      I wouldn’t bother with financing a phone because I personally don’t think it’s worth the ongoing hassle, I’d just buy and go. That said, it isn’t only those that absolutely “need” borrow in order to afford something that opt into it.

    2. How about a less intuitively obvious take….if you are on the smarter end of the Apple buying customers such that you would obviously get an iPhone 5s with enhanced abilities vs the iPhone 5c (which is a plastic version of last year’s iPhone 5 in all regards), then maybe you’re also smart and disciplined enough to opt into an arrangement whereby someone else finances your purchase interest-free as well.

      I wouldn’t bother with financing a phone because I personally don’t think it’s worth the ongoing hassle, I’d just buy and go. That said, it isn’t only those that absolutely “need” borrow in order to afford something that opt into it.

  3. It sounds to me as though Consumer Intelligence Research Partners aren’t as intelligent as they would like us to think they are.

    Far from being counter-intuitive, if you’re in the market for a high-end iPhone 5S, buying it via a 2 year contract is quite an expensive way to do it. The alternative of interest-free financing is a vastly more attractive proposition.

    If you’re not paying interest charges, you can afford a better model ( such as more RAM ) and still pay less than you might have done with conventional finance plus interest.

  4. When I ran the numbers last February, the 16 & 32gb iPhones were more expensive to finance than to buy subsidized. Only the 64gb iPhone was cheaper to finance. I was using 12 month and 20 month scenarios and including the $35 activation charge on the subsidized phones. The other issue which I did not factor in was the lack of residual value at the end of the deal with the financed phones but would be needed in a true comparison. Another negative is the cost of the subsidy is still in the price of the phone service for financed phones which I also did not factor. I agree that sometimes financing makes sense but I don’t think this financing deal is any good.

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