Phone companies offer cell phone financing so customers can purchase a new phone by making incremental monthly payments rather than paying in a lump sum. Phone companies take the total cost of the purchase, divide it by the number of months in your contract, and add that to the price of your monthly plan.
Does a monthly financing plan actually save money? Or does it simply appear so because the cost is spread out over several months?
While our research concludes that it’s usually better to buy a phone outright, we've compared the growing options available to Canadians so you can make a choice that’s best for your budget.
Key Takeaways
- Financing a cell phone can get you a new device at a lower upfront cost, but you’ll be locked into a contract.
- Buying a phone outright is a large initial investment, but comes with lower monthly bill payments.
- The cost of buying and financing a phone are the same because most phone plans offer 0% financing.
- Most carriers offer options to trade in your old phone or return a device.
- Buying a used phone from a trusted buyer is an affordable and reliable option.
Buying a phone outright vs. cell phone financing
Let's look at the pros and cons of buying a phone vs. financing it through a provider:
| Pros of buying a phone | Cons of buying a phone |
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| Pros of financing a phone | Cons of financing a phone |
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The bottom line is: If you don’t have upwards of $1,500 hanging around, you can't afford the new iPhone or Samsung Galaxy. People buy into the two-year plan because the smaller payments make it feel affordable.
People feel like they can afford an extra $30 or $40 a month. So, when Bell offers an $80 monthly phone plan for 200GB of data and unlimited calling in Canada, suddenly adding $40 for the latest iPhone doesn't seem too bad.
In the end, it's just 0% financing. If you stay on top of your bill, you aren’t paying any more for the cell phone.
Is it cheaper to buy a phone outright or finance it?
Though this would be a major pro for buying a phone instead of financing, there actually isn't much of a price difference when you compare the costs of buying a phone or financing it.
These days, when you finance your phone, the payment is simply split across your monthly bills – there aren't any tricks involved here.
That said, you can definitely find some savings if you buy a used phone instead of a brand new one, or if you trade in your old phone for a credit towards a new device.
But when you compare apples to apples – the cost of buying the phone outright and the extra tab that's on your bill – you'll mostly find that it's pretty much the same. There's no direct savings there.
Cell phone financing options in Canada
If you’re leaning toward financing your cell phone, here are some financing options and tips to help you find the best cell phone payment plan.
Financing through your existing provider
The most obvious path forward with financing is through your current cell phone carrier.
Before you sign on for a contract, make sure you know:
- The length of the term (i.e. 2 years)
- The amount added to your bill each month for the purchase of your cell phone
- When your cell phone will be paid off
The last point is the most important, since once you've finished paying off your cell phone, your monthly cost should go down. If it doesn't, you're paying extra for no reason.
Shopping around for a new provider
As you should do with most large purchases, if you can’t afford the full upfront cost, be sure to shop around and compare prices.
Here’s a quick comparison of some of the top providers and their prices for the iPhone 16 Plus with 128 GB of storage, paid over 24 months:
| Provider | Cost with device return | Cost without device return |
|---|---|---|
| Eastlink | $35.54 per month | $50.75 per month |
| Telus | $39.38 per month | $54.79 per month |
| Bell | $35 per month | N/A |
| Rogers | $35 per month | N/A |
| Fido | N/A | $54.80 per month |
| Koodo | N/A | $54.79 per month |
| Virgin | N/A | $54.81 per month |
Please note: The above prices were recorded on April 14, 2025, and are meant for illustrative purposes. Please visit the sites directly for the most up-to-date information.
As you can see, most of the providers offer similar pricing. If you’re thinking of switching, you may want to compare other benefits and features to see if it’s worth changing over.
Device return programs
Some of the top providers, like Telus and Bell, offer phone return programs. These programs allow you to essentially lease the phone from them in exchange for a lower monthly payment.
These programs require the cell phone to be returned in good working order. They also give you the option to keep the device at the end of the term, but you’ll have to pay the difference.
For example, Bell and Rogers offer the lowest monthly payment plan for the iPhone 16 Plus at $35 per month for 24 months, but only if you return the phone at the end of the period.
In fact, our research shows that Bell and Rogers don't offer any other option for brand new phones – you must return the phone after two years to qualify for the advertised monthly price.
Trade in your old phone
Most of the major providers give the option of trading in your old phone for credit towards a new one.
Continuing with the iPhone 16 Plus example above, here’s a quick comparison of trade in credits across a few of the big cell phone carriers:
| Provider | Credit |
|---|---|
| Rogers | Up to $950 |
| Telus | Up to $640 |
| Virgin | Up to $700 |
| Bell | Up to $800 |
Because this is a newer phone, the trade-in value is higher than say, an Apple iPhone 12. However, if you’re planning to upgrade your phone anyway, it’s worth checking out the value of your existing phone to see if it’s eligible for a trade-in credit.
The case for buying your cell phone outright
Even though you may not save money on buying the phone upfront, there are still reasons to do it.
How marketing affects cell phone financing
But there's another important part of the cell phone buying game – consumer psychology.
It feels better to pay an extra $40 per month than it does to pay $1,000 upfront (it's also easier to fit into a strict budget). And when we're done paying off the cell phone, we're usually ready to get a new one and keep on paying that tab – and the phone companies know this.
But you'll be on the hook for 24 months.
If you're unhappy and want to switch carriers, you'll have to:
- Cancel your contract
- Pay your outstanding balance on your cell phone
- Pay any early cancellation penalties
And let’s face it. If you didn’t have the money to buy the cell phone outright, you probably don’t have the money to pay the remaining balance. You’re stuck.
Then at the end of it all, they get to send you another notification – "You're eligible for a free upgrade!" – and the cycle starts again.
Buying a used phone
If you don’t mind a slightly older cell phone, then buying a used cell phone can be a great way to save some money.
You can usually get a one or two year old phone in great condition for about half the price.
Here's an example from Facebook Marketplace:
When buying a cell phone, make sure you:
- Insist on seeing it before you buy
- Check its condition and functionality
- See if you can set up the cell phone on a plan
- Check if it’s compatible with the provider’s network
One of the best situations would be to have the person meet you at a telecom provider’s brick-and-mortar location and have the cell phone set up there.
FAQ
Is it better to buy a phone outright or use cell phone financing?
This depends on your budget, but it's safe to say that most cell phone financing plans are a decent option, as long as you're mindful of not continually taking on debt. Either way, financing shouldn't cost much extra.
Is it better to buy a phone without a plan?
If you can afford the upfront cost, it’s ultimately better to buy a phone outright. Your monthly bill payments will be lower, you’ll have no contractual commitments, and you’ll have an easier time switching carriers, if desired.
Is it better to pay monthly for a phone?
If you can’t afford the upfront cost, you might benefit from financing a new phone. You get the phone you want immediately, with little to no upfront cost, and monthly payments may be easier than a larger initial investment.
Will I save money if I finance a cell phone?
Usually, financing a phone means the cost of the phone is divided across the length of your contract. You end up paying the same amount as if you'd paid upfront, it's just spread out over a longer period of time.
What are the disadvantages of pay-as-you-go phones?
Because you pay upfront for your usage with pay-as-you-go plans, you’ll have to monitor your usage carefully to avoid an interruption to service. Pay-as-you-go plans don’t report payments to credit bureaus, either, so your payments won’t improve your credit history.
What are the reasons I should buy a phone outright?
One benefit is that with a single transaction, the phone is yours. While buying outright isn't guaranteed to save you money, it does promote smart spending behaviour, lowers your monthly bills, and you don’t have to commit to a contract.
How can I save money when buying a cell phone?
One way that buying a cell phone outright can save you money is when you buy a used cell phone. This can cut your costs in half and can be a great option for your budget.
Does financing a cell phone build credit?
Financing a new phone can help you build credit, but only because it's part of your regular cell phone bill. So while it's not the actual financing that helps build your credit, paying that bill on time will definitely help.
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