Having hinted at plans earlier this year, Leap Wireless jumped into the device financing space announcing its aptly named Phone Payment Plan set to launch July 21.
The offering, which will be handled through a third-party, will include three options provided by the carrier depending on what it called “a variety of factors, including credit history if applicable.” Those options will include no interest, deferred interest or no credit check. The last of which is something different for the carrier, which has historically not required a credit check for its no-contract service.
The no interest option requires customers to put 4% of the device price down at the time of purchase, and then pay 4% of the price per month for 24 months. The deferred interest option requires customers to put 5% of the device price down and pay at least 5% of the price monthly, with no interest charged if the device is paid off in six months. The no credit check option requires customers to pay at least 8% down of the device price, with the requirement that they pay the remaining balance within 90 days.
At the CTIA event held earlier this year, Leap noted that it was looking to update its device financing plans that at that point allowed “qualifying customers” to get the Samsung Galaxy S4 for $55 down plus monthly payments. Leap earlier this year discontinued its PayGo prepaid service, citing the increased churn generated by the traditional prepaid offering.
More recently, AT&T put in a bid to acquire Leap, which has struggled to maintain a competitive position in the ever increasing no-contract space. The offer was put in at $15 per share, or approximately $1.2 billion, though analysts noted that with debt the full value of the deal is in excess of $4 billion. AT&T said it planned to retain Leap’s Cricket brand, with plans to expand coverage and capabilities by including access to AT&T Mobility’s network.
After putting in the bid, AT&T Mobility rolled out a device financing option of its own, allowing customers to purchase a smartphone or tablet with no down payment and agree to pay for the device in monthly installments ranging from $15 to $50 per month depending on the device. After 12 months of payments, customers would then be able to trade in that device, in good working condition, on a new device with similar payment terms.
The push into device financing followed the move by T-Mobile US earlier this year that allows customers to put a small amount of money down on a new device while making monthly payments. The carrier updated the offering last week with its “Jump” program that allows customers to pay an extra $10 per month for the ability to upgrade to a new device up to twice per year. The first upgrade has to be after six months of enrollment in the program and requires that customers trade in their old device in “good working condition.” Customers will then be able to select a new device through the carrier’s equipment installment program at the non-subsidized price T-Mobile US offers to new customers, with the remaining balance on the old device is eliminated.
Verizon Wireless has so far merely dipped its toes into the device financing model with a plan to allows some customers to make payments on devices with an included finance charge, though rumors swirl that the carrier is set to unveil a more aggressive financing plan next month. Sprint, which last week rolled out new rate plans, has said it was looking into the financing model.
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