Think buying a phone on a contract is too expensive? You're not alone. With the price of top-notch new smartphones well over $1000, the handset repayments in plans are higher now than ever before.
As an alternative to paying these handset repayments in full, Optus will now knock up to $10 per month off your monthly phone plan if you opt to lease your phone instead, and give you the option to upgrade to a newer model after 12 months.
We're all for saving money, but is this really a good deal?
If you choose to lease your phone on an Optus "My Plan Flex" rather than buy it on a "My Plan Plus" contract, you'll save up to $10 per month, which is up to $240 over the two year term, though the saving varies depending on the phone you choose.
After 12 months, you'll have the option of paying $99 to return your current device and get a new one. At which point, you'll need to sign a new 24-month contract to get your hands on a newer phone model.
Alternatively, you can return your device in "good working order" at the end of 24-months, or make an offer to buy the phone from Optus at "fair market value".
Deal or no deal?
Let's do a bit of maths.
If you buy an iPhone 7 32GB from Optus on a $65 plan today, you'll pay $24 for the phone each month. With a lease, you'll pay $14 per month. Therefore, over 24-months, your contribution will be either $576, or $336. You'll save $240 by leasing.
Of course, if you're considering a lease, then you are almost certainly someone interesting in upgrading after 24-months (or sooner). If you buy the phone on a contract you have the option to sell the handset second-hand. In most cases, you can comfortably sell a second hand iPhone for more than $240 you've saved by leasing. For example, I sold my two-year-old iPhone 6 Plus for $600 when the iPhone 7 came out.
If you'd like to upgrade sooner, Optus gives you the option to switch to a newer phone after 12-months, regardless of whether you're on a contract plan or a lease. In both cases, you'll pay $99 and you'll need to return your current phone in "good, working condition".
In this situation, the outcome is exactly the same, buy you'll have saved $120 by choosing the Lease plan and trade-up at the 12-month mark.
A third option is to buy the iPhone outright, and then sell it when the next model comes out. iPhones do hold value well, but you'd need to need to find a buyer willing to spend $950 or more to stay ahead of the Optus leasing deal.
So it is both a deal, and a no deal. If you'd see the contract through to the end of 24-months, you're better off on a regular phone plan. But, if you'd like to upgrade early, then leasing seems like the better option.
Leasing agreement image from ShutterStock.