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Alternative Ways To Pay For A New Mobile Phone

From finance to leasing, you now have more choice than ever when choosing how to pay for your new phone

Pay as you go, pay monthly, 12 month contracts, 24 month contracts – all familiar terms in the world of buying a new mobile phone here in the UK. For years, most of us have purchased their phone from our favourite mobile network or retailer, and either paid for it on a monthly contract with the network or increasingly, pay for it all upfront and then get a separate SIM only deal for it.

However, there are now more ways to own a new phone than ever before; you’re no longer restricted to just a monthly airtime contract with a network, or having to pay the full amount upfront; which can now be in the thousands, not just hundreds of pounds, thanks to the latest premium flagship models from the likes of Apple and Samsung.

This guide sets out to explain all the different ways you can now get your hands on the latest smartphone when it’s time for a new one, including some new providers outside of the traditional methods you may be familiar with.

Pay monthly contract with a mobile network

The main one we all know. You can buy these plans direct from the mobile network or from a mobile retailer such as Fonehouse or Carphone Warehouse. Pay nothing upfront, or an initial upfront payment and then you pay monthly for the minutes, texts and data you need, plus the cost of the phone.  As a general rule, the more cash you’re prepared to pay upfront, the lower the monthly cost. This isn’t always the case though as networks and retailers will often have promotions on higher data plans, so it’s worth calculating the total cost of ownership when comparing deals: upfront cost + (monthly payments x number of months) = total cost of ownership.

Gone are the days of having to worry about racking up a huge phone bills on contracts now too. New spend cap rules introduced by Ofcom mean that all networks have to allow you to cap your monthly phone bill if you want to (you’ll normally find this option at checkout online, otherwise give your network a call).

Contracts are usually 24 months long, but you can also find 12 and 18 month contracts with some providers, plus the likes of Sky Mobile now offer 36 month contracts, recognising the fact that not all of us want to change our phone every year any more.

One important thing to remember when your contract comes to an end – not all networks will notify you of this and you’ll continue paying each month, so stick your contract end date in your diary. That way, at the end of your contract you can either choose a new phone and plan or keep the phone you have and switch to lower cost SIM only deal where you just pay for minutes, texts and data, and not the actual phone hardware.

Pay as you go

Another popular choice that’s been around for years here in the UK, although it’s not as popular as it used to be, due to the introduction of short 30 day rolling SIM plans. You buy your phone outright and then top up with credit for minutes, texts and data as you need them.

Pay as you go has evolved quite a bit since the days of taking a top up card to your local newsagents. Many network providers will let you set up a direct debit to automatically top your phone up with credit each month or will let you buy discounted bundles of minutes, texts and data, rather than paying per minute, per text, per megabyte.

The big advantage of Pay as you go is that there is no credit check so if you’re under 18 you can buy a Pay as you go phone or if you have a poor credit score, it’s an option available to you.

As a rule, Pay as you go plans tend to be more expensive for what’s included when compared to Pay monthly contracts, but they come with the added benefit of you being able to cancel at any time.  Plus, you can pick up a Pay as you go phone for as little as £10 if you just want a basic model for calls and texts.


A few years back, buying products on finance was limited to new fridges, TVs, cars, or something from the Littlewoods catalogue.  Finance is now available from many retailers for mobile phones too, including the likes of BuyMobiles.net.

You choose your finance plan, pay a deposit upfront (often 10% but can vary) and then pay per month over 12, 24, 36 or 48 months. Interest rates can vary but if you shop around, you can find 0% promotions from some retailers at certain times of the year.

The key difference between Finance and a network’s Pay monthly contract is that you don’t get any minutes, texts or data included, so you’ll need to either use your existing SIM card with the phone or get yourself a new SIM only plan.

Finance can be a very attractive option, but just be aware of the interest rates so you’re 100% clear on how much you’re paying each month and what the total cost will be over the duration of the contract.

The added benefit of buying a phone on finance is that it’s unlocked so you’re free to use a SIM from any network you choose.

O2 Refresh

O2 Refresh is a bit like a traditional pay monthly mobile contract and a finance plan hybrid. It splits your monthly bill from O2 into two parts. The Device Plan is the cost of your phone (tablets can also be purchased on O2 Refresh) and the Airtime Plan is the cost of your data, minutes and texts. You can trade your phone in at any time and put the cash towards paying off your Device Plan (a bit like upgrading early with a mobile network).  It’s a handy way of upgrading early without having to fork out the full price of a contract cancellation.

O2 Refresh is worth considering if a) O2 is the best network for the area you live/work in and b) you like to always have the latest phone. However, it’s not always the cheapest option over 2 years, so be sure to compare the total cost with some other deals. And bear in mind of course, that the pricier the phone, the more you’ll pay – an iPhone 11 is going to cost you a fair bit more than an iPhone 7 (we know, we’re stating the obvious, but it’s worth remembering when you see those ads!).

Once your Device Plan is paid off, you don’t pay anything more to O2 other than for your monthly Airtime Plan.

The plan will also allow you to change your airtime tariff up or down once a month, so if your usage changes often, this can be a handy option to have.

O2 Refresh contracts are often 36 months rather than the usual 12 or 24, but you can still switch phones at any time during that contract.

Apple iPhone Upgrade Programme

This is a service available directly from Apple themselves, targeting people that like to get the latest iPhone every year. It’s worth noting that you can’t get this online, it’s only available in Apple stores.

Like buying a phone on finance, there’s no airtime contract with this, so you’ll need to get yourself a separate SIM only plan. The iPhone does come unlocked though so you’re free to choose whichever mobile network you prefer for your SIM card.

You’ll need to pay £69 upfront for your phone and then the monthly payment will depend on the phone you choose. An iPhone 11 will set you back £69 upfront and then 20 months of £40.45 a month, so £878 in total. That cost includes up to two years of AppleCare+ too, but note, you’ll need to pay a £25 excess for screen replacements or £79 for any other damage.

After 11 monthly payments, you can trade your old iPhone in and get a new one, with a new 20 month agreement starting and the payments adjusting accordingly, depending on the phone you choose. The trade-in credit for your old phone will be applied to your debit or credit card.

Make sure you look after your iPhone as it needs to be free from cracks and breaks when you trade it in for a new one.

If you choose not to upgrade after 11 months then you’ll just keep making your monthly payments until the end of the 20 month contract (or you can choose to pay it off early).

If you head to an Apple store to apply for this, make sure you take along all the necessary ID which includes valid photo ID. You can read more about the plan here.

Samsung Upgrade Programme

The Samsung Upgrade Programme is similar to Apple’s offer but exclusively for Samsung phones. Again, no airtime is included, so you’re only paying for the phone and can insert a SIM card of your choice.

You can purchase phones on the Samsung Upgrade Programme online at Samsung’s website. You have to pay 10% upfront and then monthly instalments over 24 months (normally at 0% APR).

After 12 months, you can trade in your old phone for credit and upgrade to a new Samsung phone, the contract is then closed and a new agreement is set up and your payments continue (the amount per month is again dependent on the phone model you choose).

Look after your Samsung phone, if you crack the screen you’ll need to get it repaired by a Samsung authorised repair centre before you can upgrade it.


Ray who? Raylo is a relative newcomer to the mobile scene and has introduced a new way to get a brand new iPhone – a subscription service.


Launched in September this year, Raylo’s phone subscription is a simple way to lease an iPhone. The monthly subscription comes complete with phone insurance and a free protective mobile case and two screen protectors. Customers can then upgrade to a new iPhone every 24 months by returning the old one to Raylo and swapping it for the latest model.

The idea behind Raylo is that, similar to traditional finance options, the phone is unlocked and the plan doesn’t include airtime, so you’re free to choose a SIM only deal separately with a mobile network or just use your existing SIM.

The big difference here though is that it’s a lease rather than you buying the phone outright. This means the monthly payments can work out lower than a normal pay monthly contract or finance plan, plus the insurance that’s included (underwritten by AXA) works out cheaper than sourcing it elsewhere, and most importantly covers you against loss, theft and accidental damage – something worth noting when compared to AppleCare+ which only covers against accidental damage. If you’re carrying around a £1,500, brand new iPhone 11 Pro Max, insurance including loss and theft cover is well worth considering.

Currently, an iPhone 11 Pro via Raylo will cost you £42.99 a month over 24 months, which includes your insurance. Don’t forget, you’ll need to add the monthly cost of a SIM card to your budget which you can get for as little as £8 a month with 5GB of data.

As part of the plan, Raylo also include a free Pela compostable case and two screen protectors. These are to help you look after your shiny new iPhone, but the case being compostable also means you’re doing your bit for the environment by reducing plastic use (compared to the usual cases available for mobile phones).

At the time of writing, Raylo are offering the iPhone 11 Pro and iPhone 11 Pro Max models on their website. iPhone 11 is expected to be introduced in December 2019, with discussions around Android devices launching next year.


They say too much choice can be a bad thing, but in the case of getting your hands on the latest mobile phone, a few extra options outside of the traditional pay monthly contract models are welcomed, especially now it’s so easy to switch networks via text message and with SIM only plans available on 30 day contracts.

As always, compare a few deal options, ensure you work out the total cost of ownership and if you need any help comparing prices or checking deals, you can tweet the Direct Mobiles team, send us a message on Facebook or give us a call.

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