Should You Lease Or Buy Your Cell Phone?

May 20, 2015

Usually when someone is talking about leasing versus buying, they are talking about a car or real estate. However, have you ever stopped to consider that when it comes to choosing a cell phone provider, you might be making the exact same decision? You probably never thought of it this way, but when you sign a contract with any one of the major carriers, you are in essence leasing the phone.

For example, my colleague Bruce gets a new phone every couple of years as part of his contract with his provider. That’s no different than trading in a leased vehicle or moving to a new condo every couple of years. The upside is that you get a better, faster phone that uses the latest technology. The downside is that you generally pay a higher monthly fee over the life of the contract, which is typically two or more years.

Compare that to my situation. I prefer not to sign a contract and instead pay out-of-pocket for my phone. Much like buying a car, I plan to hold on to it for as long as possible.

On the upside, I generally pay a lower monthly rate. (Currently, I have five cell phone lines for $100—taxes and fees included!) On the downside, I have to shell out a larger amount upfront. For example, if I wanted the latest iPhone or Samsung Galaxy, I’d be looking at $600-$800. Plus, with the speed of technology moving so fast, these phones quickly become antiquated.

So which option is right for you? Should you buy or lease your phone? Consider the following:

1. Who’s paying for it?

If your job requires you to have a cell phone then your company is probably paying for (or reimbursing you) for your cell phone plan. In this case, having a faster, more reliable phone and network is probably more important, so leasing your phone would make sense.

2. How much can you afford each month?

If your employer is not helping to offset the cost, then you may have to decide whether or not you can afford a more expensive plan. For example, one major carrier charges as much as $75/month for a single-line plan, compared to $35/month if I buy my phone. That’s a difference of $960 over two years (enough to buy a new phone every couple of years if you are so inclined).

3. How important is the reliability of the network?

As mentioned earlier, if you need a phone for work, and you travel (like I do), you may want to lease your phone so that you have faster connections in more places. On the other hand, if you don’t travel much outside of your area (like my kids) then buying a phone might make more sense.

4. What do you need the phone to do?

For users that just need a phone for talking, texting, and checking emails, you can purchase less-than-cutting-edge phones that do all of that for a fraction of the cost. But if you use your phone for streaming music, videos, and gaming, then you might want to lease your phone to be sure your equipment keeps up with the technology and speed required for such activity.

As you can see, when it comes to your cell phone plan, one size does not fit all. Consider what you need from your phone, your network, and your wallet before you decide. The answer may surprise you.