At the time of making this post, there is a promotion where you can get a new phone with a rather large discount if you finance it via the Fido Payment Program.
For example, a Samsung Galaxy S22 retails at full price for $1348.00.
I can choose to finance it at 0% APR for $25.84/month + $0 down payment for 24 months. At the end of 24 months, the phone is paid off and I would have spent a total of $620.16.
This seems too good to be true.
How is Fido able to offer a fully paid phone at the end of 24 months at more than 50% off retail price? Is there a hidden cost?
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They make up the difference with the price of the cellular service. Sort of goes to show just how much profit is generated from the crazy prices we pay for cellphone service. Those discounts are also an incentive to sell devices that may not be selling very well.
Welcome to the community!
I'm not sure if I can provide an adequate reply to answer your question. However, it is important to note that the actual cost of the phone would not be $620.16. The advertised $25.84 per month is After bill credit. The total cost of the device is still $1,358. However, customers are receiving a monthly credit to offset the cost of the device.
$25.84 x 24 months = $620.16
monthy credit $30.75 x 24 = $738
Total cost of device $620.16 + $738 = $1,358.16
(values taken from website May 24, 2022)
While the total amount you pay over 24 months is $620.16 (plus taxes), the significance of highlighting the monthly credit becomes apparent if you end the contract early. If you choose to end the contract prematurely, you will be required to pay the total remaining balance of the device. That is, the remaining balance would not be $25.84 x remaining months, but rather $56.59 x remaining months. The remaining monthly credits would no longer apply.
I can't say how they can manage to offer those monthly credits towards devices. However, companies regularly offer promotions to entice customers, retain customers, or boost sales etc. One could argue that the monthly credits for 24 months persuades customers to remain for at least 2 years.
Hope this helps 😀