What Are Mobile Phones On Finance?

Before discussing how this payment method works, let’s clarify what it is. Mobile phones on finance, more commonly known as contract phones or pay monthly phones are devices that can be purchased on credit.

With a credit account, you will be given a chance to hold off on payments for your new device until a later date. In most cases, you’ll need to pay back the cost of the device with interest on a monthly basis. Often, there will also be an upfront fee of some kind too.

Mobile phone finance has grown in popularity in the recent past. In most cases, you’ll need a good credit rating to get a mobile phone on finance. Plenty of sellers provide this option nowadays.

How Do Mobile Phones On Finance Work?

As with any buy now, pay later deal, there are a range of specifics you’ll need to consider. Let’s take a closer look at how mobiles on finance work. In most cases, you will need to submit an application and receive approval before purchasing a phone on credit.

A lot of the time, there will also be a credit check. You’ll generally need to fill out an online form too in which you’ll be asked for information such as your name, address and phone number.

The payments are generally broken up into a set amount of monthly payments. Such payments will include a fraction of the total outstanding cost of the device plus interest.

Can I Purchase a Mobile Phone on Finance with Bad Credit?

Having a bad credit history can be a disadvantage if you’d like to make new purchases on finance. If you have a bad credit score, you will find it more difficult to purchase a mobile phone on finance. However, it will depend on the company and exactly how poor your credit rating is.

Credit score is a crucial part of applying for a mobile phone on finance. While it’s far from impossible, with bad credit, it is unlikely that your application will be successful. With that said, there are various mobile phone finance bad credit offers available on the market worth looking into.

Benefits of Mobile Phones on Finance

There are pros and cons to purchasing a mobile phone on finance. It would help if you weighed these up before deciding whether this payment option is suitable for you. First, let’s take a look at some of the advantages.

Cheaper Rates for the Newest Mobile Phones

Newly released phones like the iPhone 12 and the One Plus 8 Pro are high-quality, top of the range devices and come with a range of up to date features. However, they each have a steep price tag, in the range of £500 to £1000. For most people, this is quite an investment.

However, it is possible to purchase brand new devices on credit, making it affordable for almost anyone to buy a brand new, top-notch device. You might pay only £15 to £30 a month for one of these devices, depending on how long the repayment time frame is and the interest rate.

Flexible Payment Options

A lot of companies offer a range of different payment options. In some cases, you will have a choice as to how long you can take to repay your debt. These options tend to be 12 or 24 months, but in some cases, you may be given the possibility of repaying over six months or 18 months, among other options.

As for how often you’ll need to pay, it will usually be once a month, but it may be weekly. Some companies offer zero-interest deals, so long as you can pay off your debt within a relatively short time period.

Alternatively, in some cases, you’ll have the chance to avoid paying anything for the first several months, although this will almost certainly mean that you will have to pay interest.

However, as you can see, there are plenty of options to choose from and arguably one to suit every consumer.

Advantage of Additional Extras and Gifts

In some cases, you’ll have the benefit of extras and additional gifts as part of a pay monthly offer. This will not be offered by every company with a buy now, pay later deal and what exactly these gifts and extras will be will vary quite a lot too.

Disadvantages of Mobile Phoness on Finance

Of course, there are also drawbacks with mobile phone finance deals. In the following subsections, we’ll break down some common downsides.

There is The Risk of Ending Up in Significant Debt

If you make too many purchases on credit, you’ll accumulate quite a bit of debt. Of course, you’ll be in debt once you obtain any amount of credit, but there is a danger of accumulating too much. Credit is not a big deal in of itself once it is kept to a minimum, managed well and you know that you can make your payments on time.

Failing to meet a payment on time, however, could result in additional interest on top of the interest you’re already due to pay as part of the initial agreement.

Missing Payment Could Affect Your Credit Score

Not only could missing a payment cost you more money, but there is a good chance that it will negatively impact your credit score. This, in turn, will make it harder to get credit in the future.

While some buy now, pay later services do not check the credit scores of applicants, in most cases, there is a credit check. Only sign up to a deal where you will be given credit if you are sure that you’ll be able to make the payments on time.

Who Offers Mobile Phones on Finance?

There are plenty of companies who sell mobile phones as part of buy now, pay later deals. Generally, these come in the form of pay monthly offers. Companies such as Affordable Mobile Phones and Carphone Warehouse provide phones on finance as do actual providers like Virgin Media and Three.

By Googling 'Pay monthly mobile phone near me’, you’ll find plenty of examples close to home. Lots of companies offer this payment option, and in fact, it is likely most mobile phone companies that do. It’s a payment option with a reasonable level of popularity and has become more common in recent years.

Considerations Before Purchasing a Mobile Phone on Finance

Even after taking on board the pros & cons of purchasing a mobile phone on finance, there are some additional points you should consider before committing to getting a new phone on credit. Let’s delve into some of these considerations.


It’s essential that you know for sure that you’ll be able to meet your weekly or monthly payments. While there is an allure to buy now, pay later payment options.

It is also important to know if you’ll be able to consistently make future payments on time, which will likely include interest. Job security and savings are arguably the two most crucial factors in determining how much confidence you can have that you’ll be able to meet payments when they’re due.

Short-term vs Long-term Saving

Unless you avail of a zero-interest deal, financially, there is no debate that you’ll lose money in the long-run by purchasing a mobile phone on finance.

However, this is only truly a disadvantage if you believe it outweighs the short-term saving benefits involved. Further, buying on credit will mean that you can get a new phone now rather than at a later date.

Purchasing a mobile phone on finance could also be beneficial if you’re looking for the perfect gift, whether for Christmas or an upcoming birthday of a friend or family member. So, before purchasing a mobile phone, make sure to weigh up the short-term benefits of getting a phone on finance with long-term financial loss.

Would you be better off just waiting till the device comes down in price, or when you can find it available for a lower price second-hand? Those are the sorts of questions you need to ask yourself before deciding if this payment option is right for you.

Interest Rate

Every contract phone deal that features interest will have its own variable or fixed representative APR. This will generally end up around 10-25% although some companies offer lower or higher rates than those that would fit within this range.

Make sure to check what interest rate is available with any given deal before making a purchase, as you may find that you can purchase the device you’re looking for with a lower interest rate from another company than the one you’re initially considering.


Contract phones are not for everyone but if you think it’s a suitable choice, make sure to do your research and choose a company with a fair and affordable deal.

As shown, the interest rate can vary quite a lot, and it’s worth comparing different company’s interest rates for any given device before making a purchase. In this article, we’ve looked at what mobile phones on finance are, how they work and their pros & cons.

We’ve also discussed additional topics such as what companies offer mobile phones on finance. With this knowledge, you’re now equipped to make a smart and informed decision. Best of luck and don’t forget to check out the various brands and companies offering phones on finance before making a purchase!


Q: Do you need to have good credit to get a mobile phone contract?

A: In most cases, yes, you’ll need a good credit rating although there are some exceptions.

Q: Can you cancel a mobile phone contract?

A: Not exactly, unless you decide to return the device that is. If you’ve purchased a device on credit and don’t return it, that debt will remain. However, flexibility is often on the table. In many cases, if you’re really struggling, companies will be open to letting you pause your payments for X amount of time, but it will really depend on the company and your situation.

Q: How long will it take to pay off my debt?

A: It will depend on the timeframe set by or agreed with the company. For instance, it may be a 12 or 24-month repayment timeframe, although in some cases, the duration will be six or 18 months or even an entirely different time period altogether.

Q: Can I purchase an iPhone 12 on credit?

A: Yes, many companies are offering the chance to purchase the iPhone 12 on credit with monthly payments of around £30. Carphone Warehouse is one such example.

Q: What is the interest rate for mobile phone finance UK?

A: It’s often around 10-25% if you’d like to buy mobile phone on finance. As you can see, the interest rate varies quite a lot, and often it will be a variable interest rate too as opposed to a fixed rate.


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