Telstra Leasing Plans a Rip-off – Don’t Pay Someone Else’s Mortgage

Telstra Leasing plans

Telstra recently launched the Go Mobile Swap plan, that lets customers lease a high-end phone for a short period. The plan works similar to other telco contracts – you pay a small (compared to the original phone price) monthly installment to Telstra. The catch? At the end of the lease, you have to return the phone to Telstra, exchange it for a newer, more expensive model and continue to pay your (now higher) monthly installment.

Telstra’s Swap plan is terrible. Here is why:

  • If you damage or lose your mobile you end up paying additional fees as penalty. What constitutes damage is not properly defined by the telcos, leaving this clause open for interpretation in the telco’s favor. You could end up paying $229 just for a cracked screen and $499 if the phone is broken.
  • If you want to actually own the phone that you have already been paying so long for, you need to pay additional charges or extend the lease a further six months.
  • If you decide to upgrade, you end up putting yourself in a situation where you can remain perpetually locked in a never-ending contract in which the monthly installment only keeps increasing.

The leasing plans are designed, so they appear to be benefitting customers, indicating that customers will save about $240 compared to the market price of the phone. But even a small crack on the screen could eat into these savings and you cannot even resell the device to recover some of your costs.

Unfortunately, the only party that benefits from this deal is Telstra. Not only do they keep earning revenue from the lease agreement but they also eventually sell the used handset earning even more profits.  Telstra already made $63 million from leased plans in the last financial year and have no intention of scrapping them.

What options do customers have?

We recommend purchasing a handset directly from a provider like Mobileciti. The great deals on the site mean that you actually save your money without paying any interest on the phone. With Amazon all set to enter the Australian market, you can expect even better deals and a wider range of mobile brands, making mid-tier handsets especially lucrative. It makes more sense now than ever before, to purchase your handset outright.

But the monthly installments include calls and data too. So it must be a good deal right?

It seems like that, but it isn’t actually true. There are many cheaper mobile service deals out there, and you do not have to let Telstra scam you out of your hard-earned money. Let’s compare Telstra’s plan with Moose Mobile.

Moose Mobile gives you a postpaid sim with 2GB data for just $19 a month. All plans come with unlimited calls and text on the Optus 4 plus network. Even 5 GB data would cost you just $29 a month. Let’s say you purchase the Galaxy S8 upfront from mobileciti for $978. Here’s how your net spend would like after 24 months.

Mobile BrandPayment Per MonthPlan BenefitsTotal Spend
(24 Months)
Phone Ownership
Telstra$78Unlimited Calls 2GB Data$1872 – minimum if no damages to phoneNo. You have to return it
Moose Mobile with handset purchased upfront$19Unlimited Calls
2 GB Data
$456+$978 for handset = $1434Yes.
Telstra$79Unlimited Calls
5 GB Data
$1896No. You have to return it
Moose Mobile with handset purchased upfront$29Unlimited Calls
5 GB Data
$696++$978 for handset =$1674Yes

So that’s a definite saving of $200 to $400 upfront. If you consider the fact that you could probably resell your phone for $300-$400 at the end of that period, and if you had stuck with Telstra you would have probably paid another $200 in charges, you can consider yourself approximately $1000 better off at the end of two years. That’s decent savings just for choosing a better plan!

Sources:

 

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.