Vodafone's new 'Red Hot' phone-rental service lends you an iPhone 5, Samsung Galaxy S3 or Samsung Galaxy Note 2 on a 12-month deal. Sounds great -- who wants a phone for two years? -- but the monthly line rental is more, and at the end of the year you won't own the phone. So is it worth it?
The upfront cost of Vodafone Red Hot phones is lower, and free in some cases. There's a full breakdown here, but for example let's say you get the Samsung Galaxy S3 16GB, which is free up front but costs a hefty £47 per month.
The Red Hot tariffs get you unlimited calls and texts, 2GB of data per month and insurance, and -- for the S3 -- would set you back £564 in total over one year.
Vodafone offers the 16GB Galaxy S3 with no upfront charge on a 24-month tariff that costs £42 per month and also gets you unlimited calls and texts with 2GB of data. Over two years that'll cost £1,008, and if you add insurance on top (£10 per month) you're looking at £1,248 -- more than double the Red Hot option. Yowza!
On the face of things then, the 12-month rental option works out the same cost, but with more flexibility. This is just a rough test, of course -- you may find other phones or networks offering particularly tasty bargains, and if you spot any, do drop us a note in the comments.
No rooting
There are some caveats with rental. First, you don't own the phone, so you can't sell it, and if you return it damaged, you'll have to pay. £75 covers 'Grade B' damage, which means the phone "has deep scratches, chips or dents to the phone, the ports are worn or there's water damage".
If you return the phone with a "non-approved operating system" you could be charged between £375 and £425 on return, a whopping cost for a bit of Android tinkering. Those who wish to root their phones take note -- this service is definitely not for you.
If your phone is damaged you can always claim on the included insurance before sending it back, though there's a £50 excess. You also miss out on the extra bit of cash you could generate by flogging your phone, though at the pace smart-phone tech is moving, don't expect to earn much for a Galaxy S3 in 2014.
Finally, the real kicker is that only the iPhone 5, Galaxy S3 and Galaxy Note 2 are available on this tariff. It seems like a pretty reasonable deal at first blush, but it'll need more choice to win over many shoppers.
Are you tempted by phone rental deals? Tell me in the comments or on our Facebook wall.
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Comments 3
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davefromwales 16 November, 2012 05:15
im not sure where you bought your calculator, but id suggest replacing it.
the 24 motnh contract is £42 x 24 months. that (as you say) is 1008. you then say if you add insurance at £10 a month it`ll cost you £1128. last i check, 24 months x £10 is 240 not 120.
So it does make it technically more expensive to go fro the contract over the `hire purchase` style option. thing is, even with it costing you £1248 (the right ammount) you`d still be able to flog your phone on, pass it on to a familiy member, or even grab a cheap sim only for a year should you want to lower your bills.
One thing to bear in mind is sim only phones and using the phone insurance generally included in most current accounts nowadays (although of course always check).
Sim only at same calls data and texts as above is £26 a month.
SGS3 16Gb (same as example used) is available for £385 on play. could be cheaper elsewhere of course.
£26 x 24 months = 624 + £385 = 2 year total of £1009
£26 x 12 months = 312 + £385 = 1 year total of £697
now to `beat` the `red hot` price, you simply need to sell your sgs3 for £134 (£133 would break even with red hot). currently an sgs2 (so a year old model for a example value) can be sold to online phone stores for £150+, so you`d imagine the ability of the sgs3 to hold its value will be the same as the sgs2 to date.
As for the 2 year price, its neither here nor there, although your only signing a 12 month sim only plan, so should your finances change, its not going to cripple you to get out of the contract, you could even upgrade to a full blown contract after the year and sell the phone and still be ahead.
either way going sim only with insurance through your bank is the best way, providing you have the immediate funds to purchase the phone and your account includes insurance cover.
anonymous 16 November, 2012 15:29
Just been on Phones4u and they are doing an Galaxy S3 with 2gb data and unlimited text and calls with a free galaxy tab 2 at £47 pm 2 year contract
Luke Westaway 16 November, 2012 17:44
davefromwales: Thanks for pointing out the dodgy insurance maths, I've updated the story accordingly.
You're dead right to point out that SIM-only deals can save you cash in the long run, and we often recommend them over lengthy contracts. I was comparing a contract in this case because it involves getting the phone free upfront, which isn't crucial for everyone but can be an important consideration.