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Apart from a mortgage or a car loan, is there anything in your life you’ve stayed committed to for four full years?
Vodafone is betting you'll add your smartphone to that list. The telco recently announced it was extending its options to spread device payments over a 48-month contract – a significant jump from the maximum 36 months offered by other providers.
The big plus? A lengthier contract means your monthly phone payment is lower. But the catch is you’ll be locked in for longer – and that could mean you’ll pay much more overall.
Outright vs phone on a plan
When buying a new smartphone, you generally have two choices:
- Buying outright: you pay the full retail price upfront and pair the phone with any plan you choose. This gives you complete freedom and no lock-in contract, but high-end models can require you to pay $1,700 or more on day one.
- Phone on a plan: You pay off the device in monthly installments through your telco, bundled with SIM-only mobile plan. Telstra, Optus and Vodafone each offer repayment terms of 12, 24 and 36 months, with Vodafone now adding a 48-month option.
Paying off a device over time is a popular choice, but a 48-month commitment comes with a few key trade-offs.
What’s the catch? The sting of early exit
If you decide to cancel your contract early, or if your phone gets lost or broken, you’ll still be on the hook for paying for the full cost of the device.
For example, Vodafone offers the iPhone 18 Pro on a 48-month plan for $43.72 per month, (plus the cost of your mobile service). If you decide to cancel your Vodafone plan after 12 months for any reason, you'll face a lump-sum payout of $1,574.
Cancelling early also means you may lose any discounts, credits or offers tied into your plan.
Vodafone, Optus and Telstra generally require you to stay on your plan for the full repayment period to actually get your full discount, as it’s applied in monthly installments. Most sign-up offers will be revoked if you cancel, so you'll need to pay out the full RRP of your phone to leave.
Why you could end up paying more
You’ll also need to watch out for the cost of the mobile plan that you pair with your smartphone. The major telcos are comparatively much more expensive than smaller providers; although these plans tend to include generous data and extras, it’s usually more than the average user actually needs.
Here’s a comparison:
If you buy the 256GB iPhone 18 Pro on Vodafone’s 48-month repayment plan, and pair it with the telco’s 65GB plan (priced at $58 per month), you’ll pay just over $4,727 over four years. This number includes Vodafone’s current sign-up offer, a $13 per month discount for your first 12 months.
But if you buy the same iPhone 18 Pro outright ($2,099), and pair it with Swoop’s $33 plan with 60GB of data, you’ll instead pay $3,623 over four years. This includes Swoop’s current discounted plan price, $23 per month for the first six months.
That’s a difference of more than $1,100, or at least $275 a year.
A 48-month contract – could it work for you?
Vodafone’s reasoning behind the new four-year contract is that more of us are holding on to our phones for longer – especially with cost of living pressures making it harder to afford a new device outright.
Purchasing a new phone on a 48-month plan might be an ideal solution, particularly if you’re keen to lower your monthly payments, as long as you are confident that:
- You’ll be happy using the same phone for the next four years.
- You can keep the device safe from major damage.
- You’re happy staying with the same provider's service plans for the duration.
As with all financial decisions, making the right decision comes down to your budget, your lifestyle, and what you’re comfortable committing to in the long term.
New phone models also roll out every year, so what might look enticing now, could lose its lustre when the next version hits stores. Make sure you’re not making decisions now that you might regret later – and be forced to pay for.
