What Does $0 Down Mean When Buying a Phone?

By Posted byPlanHub.ca Updated on November 29, 2021

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What does $0 down mean when buying a phone? You’ve probably heard the term and didn’t fully understand it, which is perfectly fine! Fortunately, we’re here to put an end to any confusion. Mobile companies will stress that you won’t have to spend any money the day that you purchase your phone. Instead, you just have to pay it off over the course of (usually) two years. It’s not always more economic to pay off a phone, but consumers may feel attracted to the idea of something being free. Advertisements for $0 cell phones are everywhere, but be careful, $0 is not free. Obviously, we understand that phones are never free, but we understand why consumers are enticed by the big zero. There’s nothing wrong with gravitating towards a $0 down payment plan, as long as you understand exactly what you’re getting into.

0 Dollar Phones

For all 0 dollar phones and full-price devices, a 2 year agreement with a wireless carrier is based on the purchase of the phone. So, when you sign your contract, make sure to read the page regarding the phone. There you should find the proof of purchase and the real price of your “0 dollar phone”. For example, if you get a LG Style with Fido right now on a contract, you will see the full price of the mobile phone as $300, and the economy you make: $300.

The benefit exists the moment you buy the phone, but a portion of your monthly fees is used to pay your tab-24. Every month the tab reduces. To find out the fees for your phone every month : the full price of the phone / 24. Those fees are what the mobile carriers call the subsidy.
All the carriers have to respect rules made by the CRTC.

Are Free Phones Really Free?

Even after purchasing a $0 device, you may be wondering: Are free phones really free? It immediately seems too good to be true, as if it is the best mobile plan you’ve ever heard of. Obviously, if a provider tells you a phone is free, it is not truly free. The sense of freedom comes from leaving the store without actually spending a penny. However, these payments will catch up with you eventually, and your “free” phone won’t feel so free anymore.

So, should you pursue such a plan just for this fake sense of freedom? Not necessarily, we ought to consider whether these $0 phones are cost efficient. Every year, manufacturers launch a new phone and during that year the prices decrease. Though, your tab does not follow that drop. Sometimes, there are only a few weeks between the purchase and the drop in the price. So if you want a new phone before the end of your contract, you would need to buy out your current contract (subsidy) and the initial price of the phone ($0 or discounted price), the total amount can be higher than a new phone sometimes. So, depending on the market, paying off your current plan and starting a new one with a new device could be cost efficient in certain cases.

Last but not least, at the end of your contract, call your carrier to check how you can reduce your monthly fees as you don’t have to pay your 24 Tab any longer and switch to a “bring you own device” (BYOD) plan. So, next time you see a provider advertising a $0 phone plan, you should be more prepared. Make sure to ask lots of questions and read everything they give you carefully. Although it won’t be free, some $0 down phone plans can offer great deals and help you save money!