[Gadgets]Verizon: buy your phone outright or spread it over 36 months

[Hamza.]

In a nutshell: Verizon is simplifying the smartphone buying experience by removing payment plan options that some shoppers would no doubt take advantage of. Until recently, Verizon smartphone shoppers had the option to purchase a phone outright and pay the full balance up front, or spread the cost of the device over monthly installment payments lasting 12, 24 or 30 months. Now, the only option is to either pay for the device in full or spread payments out over 36 months.

A quick check of Verizon’s website shows the new option applies to all devices, regardless of initial cost.

The concept isn’t entirely new, as the automotive financing industry has been extending loan periods for years to “counter” rising new vehicle costs. It’s not uncommon to see 84-month loans and with select specialty vehicles, companies are now offering 120-month loans.

While you are technically paying less per month with a zero percent interest loan on a longer term, there are risks.

For one, it keeps you in debt longer on an asset that is depreciating. It could also make switching to a different carrier or buying another phone down the road harder with an anchor attached to your ankle, especially if your new carrier isn’t offering any trade-in promotions at the time.

What's more, payment plans are often used to mask the fact that you're paying more for a phone now than you were just a couple of years ago. Lots of people don't even look at the actual price of what they are buying, but rather, how much it'll cost them per month and if they can afford the note, and that's a dangerous way to run your finances.