Most of us have heard about Apple’s iPhone Upgrade Program in the US. This program allows users to get the latest iPhone every year by simply paying a monthly fee, similar to a Netflix subscription, but for smartphones. But have you ever considered taking such a subscription in India?

Now, even in India, we have plans that allow us to get the latest smartphones every year by just paying a monthly fee. Google is one phone maker offering such a plan, but there are also third-party sites like BytePe.

How does the phone upgrade program work?

So, the basics are quite simple. Instead of paying the full price of the smartphone, you pay a monthly fee. And when the new device launches, you can upgrade to it on the same payment plan. But keep in mind that the monthly fee is actually a no-cost EMI.

For example, in India, to enroll in Google’s Pixel upgrade program, you must first purchase a device on a 24-month EMI. But, on upgrading, instead of the EMI ending after 24 months, you get a new EMI for the next 24 months. Apple’s iPhone Upgrade Program works in a similar way.

So is it just an EMI plan?

When you buy a phone on EMI, things work a little differently here. The monthly fee you pay will continue for as long as you are part of the upgrade program. In the US, many people keep upgrading to the latest iPhones year after year while paying the fee.

So, instead of owning your phone after the EMI is completed, you simply get a new EMI when the next phone is launched, and the charges remain in place. Think of it as a pay-as-you-go model, where you’ll continue to get the latest phone experience as long as you keep meeting the monthly payments. But if you want, you can decide not to upgrade your phone and keep it with you after completing the 24 months EMI.

Should you take the Smartphone Upgrade Program?

Now, on paper, this doesn’t sound bad. You pay a fee to use the phone, and then get the new model seamlessly, and the subscription continues. You can also compare it to leasing a car. But there is a catch.

An upgrade program is limited to one brand, that is, if you join Apple’s iPhone upgrade program in the US, you can only get the new iPhones, and well, you can forget considering Android flagships.

Now, iPhones are extremely popular, and many people only want an iPhone. And this scheme is ideal for that. You keep getting the latest iPhones, and Apple has you tied into its ecosystem. The same will happen if you join Google’s Pixel upgrade program. For a dedicated Pixel or iPhone fan, other brands will not matter, and they will only care about upgrading to the one launched by their favorite brand. In this regard, smartphone upgrade plans are ideal as you get to experience the latest technology at a relatively affordable monthly fee. But you should also remember that if the price of a new device increases, your monthly payment will also increase.

And this story is really quite successful. While Apple does not disclose statistics about the program, a 2020 survey by RBC Capital Markets suggested that 36 percent of participants were in the program.

However, if you are a tech enthusiast or someone who is not loyal to any other brand, the upgrade program will make no sense. If you buy a new smartphone based on which device is the best at a given time, an upgrade program will tie you down for at least 2 years until the EMI ends. So if in a year, OnePlus has a good phone, but you’re on the Google program, you’ll have no choice but to miss it.

What happens if I do not pay the EMI?

Some may think that since it is an upgrade program, you can decide not to pay and the subscription will be cancelled, as is the case with Netflix. But the reality is a little different for smartphones.

Yes, the upgrade program works like a subscription, but on paper, it is still an EMI. And if you miss your EMI, you may find yourself in trouble. First, you will be charged for missing payments and then forced to pay late fees. However, you may also have to suffer long-term consequences.

Whether you are in the US or India, missing an EMI payment will negatively impact your credit score or CIBIL score in India. And it may take you several months, if not more, to get the CIBIL score back to where it was before. A poor CIBIL score may lead to loan applications being rejected in future or interest rates on the loan being higher.

Although Google or Apple have not explicitly stated that your device will be confiscated if you fail to complete your payment, your case may be transferred to recovery agents who will start calling you. Anyone who has missed an EMI before, you know how hectic it can be.

Recently, reports have emerged that the Reserve Bank of India (RBI) may allow lenders to remotely lock phones purchased on EMI if the borrower fails to make payments. Although this isn’t effective yet, it may happen in the future that you’ll be completely locked out of your device after a missed payment.

So in that sense, yes, a phone upgrade program works like a subscription, but if you want to opt out, you’ll either have to complete the remaining installments or close your loan, which may incur additional fees. Canceling it is not as easy as your Netflix or JioHotstar plan.

Is there any alternative?

Now, if you want to keep upgrading but want more ‘no-strings attached’ options, you can look at trade-ins and exchange offers. For example, Apple’s trade in option allows you to exchange your old device when you buy an iPhone. During festive sales, platforms may also offer exchange bonuses on top of this exchange value.

With this you can buy a smartphone without EMI and you can buy any smartphone of your choice at any time. So if you are an enthusiastic person who compares every phone before making a decision, this might be a better option for you.