$0 phones still have taxes to pay (read the small print)

[fiedospuppies]

In the past I had subsidized phones and this was my first time I got a financed phone. I didn't read the small print so I wasn't aware the promo is deducted from the SRP before taxes.

Not sure if everybody is aware taxes are extra on the financed phones at Fido:

e.g.

SRP before tax $1200

Plus tax $156 (Ontario HST)

-- 

Total $1256

Financing:

Downpayment $600

Amount to be financed $600

--> Monthly payment $25 (without tax portion)

Plus taxes $156 / 24 =$6.50

Total amount mothly to pay 31.50.

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Even before the 24 months is over, a $1200 device, has market value of $600-$800. With high end phones this doesn't seem like a big issue, you get a good device with remaining device value at the end of 24 term. 

However, it's not the case with cheaper devices. I noticed, Fido is significantly overpricing cheaper devices (anbout 3 times their market value).

So if you finance a cheap discounted device you are clearly overpaying by a lot.

Let's say there isd a free device promo:

SRP before taxes $600

Downpayment $0

Monthly payment $25 (before tax portion)

Promotion - rebate on monthly payment  - $25 

Monthly payment after rebate  $0 (before tax portion)

Plus taxes $78 / 24 = $3.35

Total amount mothly to pay 3.35

The issue with cheap devices is they have significantly lower street value at time of purchase and even more after 24 months term is over. Average street price for a discounted (old model) device ..... (with SRP between $450 - $500 which Fido is offering at zero or close to zero monthly cost ).... is about 3-4x less the original SRP. 

So I believe, it is not worth to get cheap discounted financed phones from Fido.  Because of the street price discrepance AND because inflated taxes you pay on the phone at Fido, if you are getting a cheaper device, you should purchase the phone outright because you are overpaying for the device significantly.

Can anybody confirm my estimates are valid?

Thanks

[fiedospuppies]

Almost every older device that is sold on discount is 3-3.5 times overpriced compared to what is available through other online resellers. 

[KAPABLE-K]

@fiedospuppies which device are you talking about? Give an example.

[KAPABLE-K · Accepted solution]

Hello @fiedospuppies 

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@fiedospuppies wrote:

In the past I had subsidized phones and this was my first time I got a financed phone. I didn't read the small print so I wasn't aware the promo is deducted from the SRP before taxes.

Not sure if everybody is aware taxes are extra on the financed phones at Fido:

e.g.

SRP before tax $1200

Plus tax $156 (Ontario HST)

-- 

Total $1256

Financing:

Downpayment $600

Amount to be financed $600

--> Monthly payment $25 (without tax portion)

Plus taxes $156 / 24 =$6.50

Total amount mothly to pay 31.50.

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We all have to pay taxes and it's not an extra payment when financing a phone.

If you make a $600 down payment you will pay $600 upfront + applicable taxes. In some cases, they will process the order with just the amount of $600 flat. The difference is how this will be billed, the upfront payment will be a credit on the account balance. In other words, it will cover the charge of $600+tax on the upcoming invoice for the down payment. So for the down payment, they will simply calculate what you paid upfront - $600+tax. If you did not pay the taxes initially, the difference will be owed once the invoice is issued.

For the remaining finance balance, $600 / 24 = $25+tx

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However, it's not the case with cheaper devices. I noticed, Fido is significantly overpricing cheaper devices (anbout 3 times their market value).

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Which device do you see Fido is charging 3 times the value?