What are rent to own cell phones?

Written by
rent to own cell phones

According to a Pew Research Center fact sheet from last summer, a whopping 97% of Americans now own a smartphone. This statistic is up from the 35% of people who owned a smartphone a decade ago. Comparatively speaking, only about 80% of Americans have a toaster in their home, so more people have smartphones than toasters.

With that, it’s safe to say that smartphones are virtually a necessity if you want to live a stereotypically normal American life. However, most phones cost upwards of $1,000 nowadays, so it’s not a cheap necessity. 

Plus, just like with vehicles or houses, you should weigh your purchasing options when thinking about buying your next phone in order to save yourself some money! Once you’ve decided on the make, model, and features of your new smartphone, you need to make the decision as to whether you’ll buy it outright, make monthly payments on it, or lease a phone. This article will take a closer look at the pros and cons of the latter.

What does rent to own mean?

Sometimes sales phrasing can be a bit misleading, but that’s not the case with rent-to-own cell phones. If you don’t have the financial means to buy a cell phone outright, your options are making monthly payments, or leasing, which can result in ownership at the end of the lease period, which is renting to own. 

If you choose the rent-to-own method versus making monthly installments on a full purchase, your payments will be smaller, but at the end of the term you won’t own the phone. Normally the lease length coincides with a free upgrade and consumers can enter right into another lease with a newer model simply by returning their old phone. 

However, if you happen to fall in love with the phone you’re leasing, that’s when a rent-to-own scenario would come into play. There is a buyout clause when renting a cellphone, and when you get to the end of the lease, the vast majority of agreements will have a set price you can pay to purchase the phone at the used price. You were the user, but you didn’t technically own it. 

Do I need good credit to lease a cell phone?

You do not need good credit for the majority of rent-to-own cell phone deals. Some companies may require you to set up autopayments and have stiff penalties for missing them, but in the heavy majority of phone leasing scenarios, bad credit shouldn’t affect your ability to get that new phone. 

Will a rent to own cell phone improve my credit?

It is very unlikely. A rent-to-own agreement isn’t technically a credit agreement like a payment plan on a full purchase would be. However, you do wind up having the possibility of the phone negatively affecting your credit, as unpaid months can result in reports to creditors from your carrier or phone distributor. It is highly recommended that you make your payments on time if you have any concerns about your phone lease resulting in credit hits.

Financing a phone vs leasing a phone

The short answer to the question of, “What’s the difference between financing and leasing a phone?” is that a financed phone is yours at the end of the period, whereas a leased phone is not. A sensible next question for most is, “Why would I ever lease then?”

For starters, lease payments are less expensive than finance payments, so if you’re looking to limit your expenses, that’s the first pro of leasing. Additionally, many people choose to upgrade their devices every couple of years anyway, so they don’t mind simply starting a new lease on a new device and returning the old device to either the service provider or retailer. 

Plus, financed phones become the property of the payer as soon as all payments have been made.

What are the benefits of leasing a cell phone?

Here are a few more benefits of leasing a phone.

Upgrades are available

With most lease agreements, you can upgrade to a new phone if one becomes available, with a couple of stipulations. If the upgraded phone is more expensive, your lease payments may go up a bit, and the lease terms may be extended if a new phone is leased.

It can be more cost effective

If you’re not in a mindset that you need to have something tangible following a bunch of payments, then leasing is a great way to save money. Monthly payments are lower, and most times the insurance on the phone is included. An extra fee might be offered in financing situations as well. 

No credit checks

As you’re not really buying anything, simply using someone else’s property, credit checks are rarely required. At any time payments aren’t made, the retailer or service provider can simply demand that you give back their property. And if you don’t, your credit might be negatively affected.

Who buys old phones?

A perceived benefit of purchasing a phone with payment plans (financing) is ownership of the device, but unlike many industries, a product in tech that is two years old is pretty darn old. When leasing, the service provider is responsible for repurposing the used phone, rather than you looking to sell your old phone so you can put money towards a new one. 

Are there disadvantages to leasing a cell phone?

Financing versus leasing is really dependent on the answer to the question, “What is my financial situation?” Here are a few aspects of leasing that may not sit well with everyone.

The leasing company owns the phone

At no point during a lease agreement is the phone yours. You can still download all the apps you want and such, but any physical modifications are prohibited, and you may be liable to pay for damages to the phone if you do choose to return it to the official owners in bad shape.

Buyout fees 

As mentioned above, you never own the phone during the lease agreement. However, you can choose to purchase the phone at the end of the term, but oftentimes, the payments plus the buyout fees equate to much more than the phone was worth at the point of purchase.

Should I rent or buy a cell phone?

Here are some theoretical situations for both options to help you choose:


  • I want low monthly payments.
  • I will be upgrading in 2 years anyway and don’t care if I actually own my phone.
  • I take good care of things and shouldn’t have to pay for damages when the term is up.
  • I don’t want anyone to check my credit.


  • I have some money to spare and I don’t want to deal with payments. 
  • If I am making payments, I want it to be on something I will own at the end.
  • I might fall in love with the phone and don’t want to pay leasing buyout fees.

Is Rent to Own the Right Choice for Your Next Phone?

Cell phone prices continue to rise, as do their capabilities, of course. Some phones are upwards of $1,500 and finding the best way to maximize your dollar on these large purchases can mean saving substantial amounts of money. 

It’s ultimately situational, so weigh the pros and cons of this article against your current financial situation. When you do that, you can make a well-informed choice!


Why do people rent phones?

Renting phones allows people to avoid credit checks, make lower payments, and in many cases, upgrade more easily.

Is it better to rent a phone?

Financing a phone versus renting/leasing a phone really depends on the individual. Both offer money saving options dependent on what kind of consumer you are.

Is it worth it to lease a phone?

If you are planning to get a new device every couple of years, leasing is a very good option and certainly worth looking into. Deals vary, though, and make sure to ask for a side by side comparison relative to financing.

Sign Up
Sign Up
Sign Up