‘0% APR’ and Mobile Phone Contracts: What You Need to Know🧑‍💻


February 5, 2020

Written By

Raylo gets to grips with a dodgy network practice

If you’re looking for the latest iPhone models, you’re probably browsing mobile phone contracts. 

And why wouldn’t you be? The networks promise that their phone and SIM contract deals are the most affordable way to get the newest mobile handsets and a few of them often advertise the 0% APR as a hook. 

The reality though is quite different, read on to find out.   

Understanding APR 🤓

When you take out a loan, mortgage or a credit card, you need to pay back an applied rate of interest on the amount you’ve borrowed. The percentage part of APR is the amount of interest you’ll pay on the sum borrowed, and it’s worked out over the course of a year, rather than each month.

As Money Expert notes, when you take out any kind of loan, it’s a legal requirement that the APR is disclosed to the consumer:

“All forms of loan, credit cards or mortgages must have their APR displayed to you when they advertise their products. This is because doing this allows you to compare the various different options that you have in a quick and easy way.”

In the past, mobile phone networks didn’t disclose the APR on their phone contracts. They didn’t have to because they weren’t technically in the loan market. In recent years, however, the introduction of ‘linked split’ contracts – packages where you pay for your handset on finance and your SIM airtime as a separate contract, has led to APR being advertised by the provider.  

But do those 0% APR figures tally with reality? 🧐

There are a few networks, those that offer split linked contracts, that claim to offer 0% APR finance to tempt customers into taking their handset and SIM bundles. However, when you dig into the detail, the loans are actually not 0% APR. The way the networks get around this is by overstating the value of the price of the phone above the actual RRP, we’ve displayed a current and real example below; 

  • SKY Mobile states iPhone 11 Pro 64 GB “Retail price” is £1,086 when it actually costs £1,049 on Apple’s website. So it’s apparent ‘0% APR’ when calculated with the true cost of the phone, is actually over 3.5% APR. 

Not exactly what you thought you were signing up for, is it?  And SKY are not the only ones that are doing this, Virgin Mobile also partake in this charade. 


Don’t let the networks win 🦖

Dubious 0% APR claims are yet another dodgy tactic from the phone networks that hurt the consumer. But, that doesn’t mean you have to go along with it. While it’s prohibitively expensive for many people, buying the newest iPhone outright will save you money in the long run. 

And then there’s the Raylo way. Our phone subscription service is currently the cheapest way to get the latest iPhone handsets. A 24-month 64GB iPhone 11 Pro subscription with Raylo is £36.99 a month. Combine that with a cheap SIM-only deal from one of the networks, and you’re saving a packet. 

No hidden costs; no ‘0% APR’; no bulls—t. It’s the way phone-shopping should be.