Is it cheaper to get a phone contract with a zero upfront cost?

Zero upfront phone contracts, also known as free phone contracts, don’t require an initial payment when you receive your phone.

Instead, the cost is spread over the duration of the contract, which is usually 24 or 36 months in length.

Zero upfront contracts can seem very tempting, however they don’t always offer the best value for money.

In more cases than none, it’s cheaper in the long term to opt for a phone with a higher upfront cost compared to a low upfront cost.

However, contracts with a zero upfront cost allow you to spread the cost over a long period, for smaller, manageable payments.

Zero upfront contracts often cost more in the long run as they are more risky for networks. As a result, they tend to charge a premium.

You should avoid zero upfront phone contracts if you can actually afford to pay a high upfront cost initially, as you can potentially save a lot of money in the long run.

How do phone contracts with a zero upfront cost?

Phone contracts with a zero upfront cost work similarly to normal phone contracts.

The main difference is you pay nothing for your phone initially. It’s delivered to you without having to make a payment.

Instead, the cost is spread over the duration of your contract, with monthly payments required for the duration of the contract length - typically 24 or 36 months.

They can work out more expensive compared to normal contracts, which require a higher upfront cost.

Should I get a phone contract with a zero upfront cost?

A zero upfront phone contract can seem tempting, however they aren’t always suitable or the best option.

In most cases, you will pay more in the long run for a contract with a low upfront cost. However, this isn’t always true - make sure to compare phone deals first to find the cheapest option.

If you can’t afford to purchase an entire phone outright or with a high upfront cost, a zero upfront is a good way to spread the cost over a long period.

However, you must ensure you have a stable income and will be able to pay the monthly instalments for the duration of your contract. Failure to do so will negatively impact your credit score and may see debt passed onto debt collectors.

Generally, you will need a good credit score and a stable income in order to be accepted for a phone contract.

Our research has shown zero upfront contracts typically have a 25% acceptance rate, with the rest being declined. The acceptable rate increases as the upfront cost increases.

What are the alternatives to zero upfront phone contracts?

A common alternative to zero upfront phone contracts is to purchase a phone separately on finance, and pair it with a 30 day SIM only deal.

You can purchase the latest Samsung Galaxy S24 and Apple iPhone 15 from Samsung and Apple respectively, on finance and typically with 0% interest.

Once you have your phone, you can purchase a separate 1 month rolling SIM deal from a wide variety of networks.

Essentially, you will have two separate contracts - one for your phone, and one for your tariff (SIM).

This method often works out cheaper compared to purchasing a zero upfront phone contract.

However, since you essentially require two contracts, it’s not as easy and manageable compared to a single contract.

Will a credit check be performed when I apply for a zero upfront phone contract?

A credit check will nearly always be performed when applying for a phone contract, including a zero upfront phone contract.

A network will typically look for a good credit score without any missed payments in the last 6 years.

They will also look for someone with a fixed address who has a stable income.

Our research has shown the acceptance rate for zero upfront cost contracts hovers around 25%. The acceptable rate gradually increases as the upfront cost increases.

See our article on minimum credit score required for phone contracts for more information.

What are the benefits of zero upfront cost phone contracts?

• Spread the cost over time - if you can’t afford the value of the phone upfront, spreading the cost for the duration of the contract is a more affordable way to get the latest devices.

• Manageable payments - spreading the cost over a long period can result in small, manageable payments, without making a huge dent on your bank balance.

• Free upgrade - once your zero upfront contract comes to an end, you will typically receive a free upgrade, allowing you to get your hands on the latest phones such as the Apple iPhone 15.

What are the negatives of zero upfront cost phone contracts?

• More expensive long term - typically, zero upfront phone contracts work out more expensive compared to contracts with a higher upfront cost. This is because they are more risky for networks, so they charge a premium.

• High decline rate - from our research, 25% of applications for zero upfront are declined. This is often due to an insufficient salary or a low credit score. Furthermore, if you’ve been declined, this can show on your credit report for several years, which may affect future applications for loans or credit cards.

• Requires stable, high income - in order for a network to decrease their risks, they typically look for applicants with a relatively stable and good income. There is no definitive amount required, however the higher your salary / income, the better your chances of being accepted for a zero upfront cost phone contract.

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