Leap Wireless' prepaid brand Cricket Wireless is expanding its device financing plans to help customers purchase a new smartphone.
The company, which offers low-cost prepaid wireless service, announced Wednesday three new zero percent financing options for customers that will make it easier to get their hands on hot new smartphones. The company initially announced a device financing plan late last year. And at the time, it said it would expand that option.
The new options come in three flavors, which will be offered to customers based on a variety of factors, including credit history, the company said. When customers apply for the Phone Payment Plan, they are eligible for one of three offers: No Interest, Deferred Interest or No Credit Check.
The No Interest plan is the best deal for customers and will be offered to customers with the strongest credit history. It allows customers to put down 4 percent of the total cost of their device as a downpayment for their new phone. And then they can finance the remaining cost of the device by making 24 monthly payments also at 4 percent of the cost of the device.
For a device such as the Samsung Galaxy S4, which sells for $600 on Cricket's network, that means a down payment of $24 and monthly payments on top of the monthly service cost of $24.
The Deferred Interest plan requires that customers put down 5 percent of the total cost of the device as a down payment. And then they have six months to pay off the remainder of the loan at no interest. Using the Galaxy S4 as an example, that's a down payment of $30. And then the customer would have to pay $95 for six months to pay the device off.
The No Credit Check plan is the most restrictive and it's offered to customers with the weakest credit ratings. It requires an 8 percent down payment and customers then have 90 days to pay off the rest of the phone. That would be a $48 down payment for the Galaxy S4 with the remaining $552 of the device to paid off within three months.
Obviously, the best deal for consumers it the No Interest financing plan, but just as customers have to qualify for better mortgage rates or financing terms when purchasing other big ticket items like a home or a car, the best program is only offered to the most credit-worthy customers.
Still, Leap's chief operating officer believes that these plans helps the company solve a big problem for consumers, which is making high-end smartphones more affordable to average consumers, who otherwise wouldn't be able to pay the full cost of a new smartphone upfront.
"The program allows us to reach those customers who would normally enter a long-term contract agreement with a postpaid carrier," Jerry Elliott, president and COO of Cricket said. "The best phones in the world are now within even more people's budgets. "
The news comes as other carriers have also announced financing plans for customers, and plans that allow subscribers to trade in existing phones more frequently for upgrades. T-Mobile announced its Simple Choice plans in March, which allows customers to purchase a new phone for a $100 or $200 down payment and then pay off the remaining cost of the device over 24 months.
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Verizon came out with something somewhat similar. Earlier this year the company introduced a payment plan for tablets and smartphones costing more than $349.99. People interested in this program can spread out payments for their new device over 12 months. There is a finance charge with Verizon's plan. It costs $2 per month for a total of $24 in financing. The first payment and finance charge is due when the device is purchased.
AT&T also announced its AT&T Next plan, which offers an installment plan and early upgrade. Customers can pay for a device in 20 installments. The fees vary based on the device that customers purchase. A Samsung Galaxy S4 has a monthly fee of $32, which is paid on top of the existing service plan. Customers also have the option after 12 months to trade in their phones for a new one.
It's unclear what will happen to Cricket's financing plans in the future. AT&T on Friday offered to buy the company for $1.2 billion. Regulators and shareholders still have to approve the deal. Until then, Elliott said the companies will continue to compete as separate companies.
Muve Music 4.0
In addition to the new financing plans, Leap also announced an upgrade to its Muve Music application. The application now features a new user interface for easier discovery of music and offers improved navigation. The app itself is also faster, and it allows users to instantly play songs as soon as a new song starts downloading.
The upgraded service, which allows users to store music on their devices, can now be used with any SD card. Previously, it had been limited to a special Muve Music SD card. Muve Music will also be stored internally on devices with more than 4GB of available internal memory and on the generic SD card for devices with less than 4GB of available internal memory. The Samsung Galaxy S3 and Samsung Galaxy S4 will be among the devices to come preloaded with the latest version of the application. And it will be standard on all future Android based smartphones sold by Cricket.
The company also announced pricing and availability for two new phones in its device lineup: The Samsung Galaxy Admire 2 and the Samsung Galaxy Discover. Starting Sunday, the Galaxy Admire 2 will be available for $269 and in select markets it will sell for as little as $50. The Galaxy Discover, also available starting Sunday, will be sold for $80 and in some markets will cost as little as $20.
These devices and the new financing plans will be available in Cricket stores within the company's 35-state territory and some of its partner affiliates. These phones and financing services will not be immediately available nationwide through big-box retail partners, such as Wal-Mart or Radio Shack.