Ridiculous Down Payment

eightd

    I am completely appalled at what happened today.

    I had finally decided to ditch ATT due to slow LTE speeds in my area and jump over to T-Mobile and went to do so today. I'm going from an LG G4 to a Note7.

    My information was taken for a credit check, which I wasn't at all worried about. My credit isn't excellent, but with all three fico scores in the upper 600s I assumed there wasn't going to be much of an issue, even if a small deposit/down paymentt was needed. Add to that my perfect history with ATT and Verizon and I figured the switch was a done deal.

    So then, imagine my surprise when I was told they could finance the phone for $700 down. Seven-hundred.

    First of all, I can't imagine why I'd bother because at that point it would make more sense to buy it outright.

    Relatively speaking, I paid less down and had a significantly easier time purchasing a new car recently.

    I contacted customer service to see if I could figure out why it was so high, and if a mistake might have been made. The representative (who, to his credit, was very nice) informed me that this was indeed correct and unfortunately had no real explanation as to why.

     

    Just as an experiment, I had a Verizon sales clerk see if they could get me approved, and there was no problem at all. No money down, Note7 on their equivalent monthly financing option.

    Similarly, I could use my current Next plan with ATT and pay nothing up front.

    Why then, does it seem T-Mobile is making it substantially more difficult to switch to them than Verizon?

    I'm actually extremely disappointed. I was fully prepared to join "Team Magenta" for the benefits and better coverage in my area. Unfortunately, I'm stuck with the same old Big Two it would seem, as I'm certainly not paying $700+ up-front to go to T-Mobile. Especially not for seemingly no reason.

      All replies

      • tidbits

        Re: Ridiculous Down Payment

        How is T-Mobile going to know your history with other carriers? The reason why you may have a "better" deal is because you do have history with them like you said.

          • eightd

            Re: Ridiculous Down Payment

            Relevant information is why. The point was that there are no negatives on my credit report from any mobile providers.

            Yes, I do have a long history with ATT, but not Verizon. I only had them for about a year, several years ago and paid my ETF to move to ATT. Thus, Verizon has no particular reason to trust me any more than T-Mobile does.

              • tidbits

                Re: Ridiculous Down Payment

                Doesn't matter if you have negatives or not.  You have history and that affects decisions. Even if you left early YOU still paid on time, and fulfilled you end of the deal. I used to be an underwriter.

                 

                Personally I'd give a better deal to a person who has a history with Citibank(where I used to work) and a 650 Credit score than the guy walking in getting the same loan amount with no history with us.  That can be the difference of up to 7% interest rate.

                 

                When you purchased that car and put less than $700 down chances are you are paying 3-7% more interest which comes out more than if you put a down payment larger than $1,000. 

                  • eightd

                    Re: Ridiculous Down Payment

                    You missed where I said "relatively." I put down $10,000 on a $35k vehicle. The equivalent to what I would be paying up front for the phone would have been a down payment of $28k, which would be rather silly.

                    History may make a difference, but if that other customer walks in with a squeaky clean 800+ on all three bureaus, and a long, spotless credit history with great DTI ratio, etc., There is no question who will walk out with a loan.

                      • tidbits

                        Re: Ridiculous Down Payment

                        That's if you have 800, but we are talking 600's with no credit history.  There is a huge difference between those scores.  The higher the less we look for history.  If you are sitting at 650 I'd take the guy who spent a year with us than I will with a person who has no history with us and interests reflect that. 

                         

                        A car has a higher resale value and easier to recoup the money.  Most cell phones within the year always sells less than 50% is value on release.  You can't say the same for a car.  So a car is a bad comparison.

                          • eightd

                            Re: Ridiculous Down Payment

                            You make a fair point. Part of what I'm trying to convey, though, is that a $35k item is something that requires more investigation and consideration on the part of the financing bank, than is an $800 item. I think we can agree on that.

                            The credit check done by T-Mobile, or Verizon for that matter, can't have too much thought placed into it, based on the literally instant decision. I would assume there's some sort of algorithm used by a computer to offer these instant results.

                            I could afford to pay the $700, but at that point why bother? As I said in my OP, if I'm going to pay that much, I might as well just part with the remaining $150 and buy it outright. Which, again, I could, but have no desire to and no need to. I want to switch to T-Mobile, and I assume that T-Mobile would prefer to have me as a customer as well. It's just that I could pay $0 if I stay with ATT or even switch to Verizon. That makes it a lot harder for me to justify leaving. Surely you can see where I'm coming from on this?

                              • gramps28

                                Re: Ridiculous Down Payment

                                The bank will reposse the car if you default on the loan in a heart beat but Tmobile has no option to get the phone back if you default on your payment except blacklisting.

                                • wtssuperpower

                                  Re: Ridiculous Down Payment

                                  I definitely see where you are coming from eightd ,  $700 is a chunk of change for sure.   I guess the way I look at it (I have pretty high downpayment amounts right now, too) is that I tough it out with my Note Edge for just another couple of months and then, because I have made every payment on time within 2 days of its due date, I will qualify for zero down and then I will get the phone I really want.    For me, the lower cost of the service is way worth what is to me a small enough sacrifice.  I actually like my Note Edge.

                                   

                                  But, that's one thing to keep in mind -  once you have established a history with T-mobile (12 consecutive on-time payments) then you will be considered well-qualified and will get the lowest downpayment amounts.

                                   

                                  Another thing to consider is that any of the other providers (who are offering you a 'free' device, in exchange for a 2 year contract) are going to recover the cost of that device from you in higher service charges.  Except that once they've done that, they are not going to then reduce the amount you are paying for service. Additionally, should you decide to change carriers they are going to doubly recoup that initial loss-leader in the form of ETF.

                                   

                                  So, when making my own decision it was a combination of things which made T-mobile the right choice.  I am honestly super happy with my service, and enjoy all of the little perks like Music Freedom, Binge-On, and the free Pokemon Go data just about sent me over the moon I was so delighted.   Oh, and also Frosty's. 


                                  Just my two or seven cents.