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Buying a phone outright vs on a plan – What’s the best way to go?
Buying a phone outright can save you in the long run, but a plan makes upgrading easier - especially if you're eyeing a premium phone with a big upfront cost.
Getting a phone on a plan lets you pay it off interest-free over 12, 24, or 36 months, making it easier on your wallet.
The catch is that you're limited to Telstra, Optus, or Vodafone, and you'll need to pair the phone with one of their pricier SIM-only plans.
If you've got the cash, buying outright is cheaper overall, as it allows you to choose a more affordable SIM-only plan.
Buying a phone outright vs on a plan: How does it work?
In Australia, there are two main options for getting a mobile phone:
Buying outright: This means paying for the phone all at once. No SIM-only plan is included, so you can use your existing mobile plan or find a new one. You can snag a phone from brands such as Apple, Samsung or Google directly, or check out retailers like JB Hi-Fi, Amazon, or The Good Guys.
Buying on a plan: Here, you pay for the phone in monthly instalments through a telco like Telstra, Optus, or Vodafone. Along with the phone payments, you'll need to choose a SIM-only plan and commit to a repayment period of 12, 24, or 36 months.
These days, buying a phone on a plan won't lock you into a contract as it used to. However, if you leave before completing your committed term, you'll need to pay off the remaining cost of the phone.
In some cases, the discounts you get from telcos are tied to staying with them for a specific period. If you cancel early, you'll have to cover the remaining balance on the phone and lose the discount.
"For as long as I can remember, I have been buying my iPhones as part of a phone plan. Yes, it ends up being a bit more expensive in the long run but it's a cost I'm willing to cop for the convenience and immediate affordability that paying monthly allows me. Maybe one day I'll change tact but realistically, iPhones aren't getting any cheaper and parting with a small monthly amount is so much more palatable to me than parting with a few thousand dollars in one go. It's an expense I'm happy to make because I reap the value of it every day."
Pros and cons of buying a phone outright vs on a plan
Here's a quick look at the pros and cons before we give you our final verdict:
Buying on a plan
Pros
Payments are more manageable as they're spread over 12, 24 or 36 months. The longer you sign up for, the smaller your monthly repayments will be.
Discounts and bonus gifts are often offered by telcos, especially during pre-order periods for flagship handsets.
There's no lock-in contract, so you can pay off the cost of your phone and leave the plan whenever you want.
Major telcos sometimes give more perks on their mobile plan compared to smaller providers.
Cons
More expensive in the long run as SIM-only plans from Telstra, Optus and Vodafone are pricier. You might not need heaps of data or other perks like international roaming.
You're always going to be limited to the major telcos if you want a phone on a plan.
Vodafone tends to work out the cheapest, followed by Optus and Telstra. However, Vodafone's coverage might not suit those in rural or regional areas.
Buying outright
Pros
Usually cheaper in the long run as you can choose any SIM-only plan from any provider.
Discounts and other perks may also be available during sale periods.
You can switch mobile plans whenever you want without having to worry about paying off the cost of the phone.
Cons
Can be expensive to pay for upfront if you're going for a premium handset like the latest iPhone or one of Samsung's flagship handsets.
Our verdict
Choosing between buying outright or on a plan really depends on your situation.
If you're okay with paying upfront, buying outright is usually cheaper.
But if you'd rather avoid a big upfront cost - especially for a premium phone that could set you back over $2,000 - paying in instalments might be easier.
Opting for a shorter plan, like 12 months, can save you money compared to a 36-month term.
Just keep in mind that telcos often don't offer discounts, bonus trade-in credits, or gifts with their 12-month repayment plans.
To get these perks, you might need to commit to a 24- or 36-month plan instead.
Is it cheaper to get a phone on a plan?
Most of the time no, it's not cheaper to get a phone on a plan.
Let's break down the numbers to show why getting a phone on a plan might cost more in the long run.
We'll keep this example evergreen by skipping over temporary discounts and other promotions.
For the sake of this example, let's assume you're eyeing the Samsung Galaxy S24 Ultra (256GB model) from Telstra.
And you're pairing it with its cheapest SIM-only plan which is $65 a month for 50GB.
Here's a look at the cost breakdown between buying it outright and pairing it with the cheapest SIM-only plan from Belong (25GB for $30 a month), which runs on Telstra's wholesale network.
Good to know: Vodafone often turns out to be the cheapest option, followed by Optus and Telstra. However, Vodafone's coverage might not be ideal for those in rural or regional areas. Always check network coverage for your address on the provider's website before signing up to a phone plan.
How often to Aussies upgrade their phones?
According to Finder's Consumer Sentiment Tracker, more than two-thirds (69%) of Aussies upgrade their phone due to performance issues. 15% felt their phone was too slow, 12% experienced total death of their battery and a further 12% said their battery life was poor.
Other reasons included their contract coming to an end (8%), seeing a new phone they liked (7%), being offered a new phone by their telco (6%), getting a hand-me-down (5%) and losing a phone (2%).
Best SIM-only plans
If you decide to buy a phone outright by the end of this guide, don't forget to snag a great deal on a SIM-only plan to go with your upgrade.
Check out our table of plans to get you started.
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You can only get a phone on a plan from the major telcos in Australia - Telstra, Optus and Vodafone.
Smaller providers like amaysim do sell phones but not on a plan. You'll have to purchase one outright or stagger the cost of over 3 months when you sign up to an eligible prepaid plan.
Telstra, Optus, and Vodafone might run a credit check when you sign up for a phone plan, but it usually won't impact your credit score.
However, missing a bill payment could be marked as a default on your report and harm your score. You can read more on this in our guide.
Paying for a phone upfront works out cheaper in the long run since you can pair it with a cheaper SIM-only plan.
However, paying monthly can make the costs more manageable though you will be restricted to signing up with Telstra, Optus or Vodafone.
Mariam Gabaji is an editor and tech and utilities expert at Finder with 12+ years of experience as a journalist. She's committed to helping households cut through the industry jargon and save money on their bills. Her expertise is often featured in media including the ABC, Yahoo Finance, 9News, 7News, A Current Affair, The Guardian, SBS and Money Magazine. See full bio
Mariam's expertise
Mariam has written 298 Finder guides across topics including:
There are just 3 mobile networks in Australia but over 50 phone companies to choose from. The choice can be overwhelming so we’ve made it easier by rounding up the 10 mobile service providers on Finder instead.
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