Not enough people know about this amazing way to buy an iPhone X (AAPL)

iphone x iphone 8 (smaller, brighter)

The iPhone X is an extremely expensive device, costing £999 or more if you buy it outright.
Most people end up paying much more than this by committing to two-year contracts with their mobile carriers.
There's a better value way of avoiding these costs and buying an iPhone X directly from Apple, called the iPhone Upgrade Programme.
It can save you hundreds of pounds versus going through a mobile carrier.

I am an Android user and, for the first time in 13 years, I'm tempted to buy an iPhone. That's apart from a short blip in 2015 when I bought an 8GB iPhone 5c on a two-year contract, but the less said about that misadventure the better.

It's the iPhone X that's close to swinging it for me, despite the eye-watering price. Now that smartphones are so commoditised, it's hard to pick out a new phone you really feel enthusiastic about — but the iPhone X looks really special.

It's also very, very expensive, however you choose to buy it.

That's why I'm amazed more people don't go through the iPhone Upgrade Programme, which essentially involves buying an iPhone on finance, with 0% interest.

For a 64GB iPhone X and two years of AppleCare+, you pay £56.45 every month for 20 months and an upfront cost of £69. This works out in total as £1,198. You would pay exactly the same amount if you bought the 64GB model upfront for £999, along with two years of AppleCare+.

There's also the separate iPhone Payments programme, where you can buy the same iPhone X without AppleCare+ for £46.50, plus £69 upfront, which works out at £999. Again, that's what you'd pay upfront.

This is better value than most other ways of buying a new iPhone X right now.

According to an investor note from Bernstein this week, not many people go through the iPhone Upgrade Programme.

That's despite the obvious advantages.

Firstly, it's the most immediately affordable way for me to buy the top-of-the-line iPhone right now.

Secondly, once you have made 11 payments towards your iPhone X through the upgrade programme, Apple will let you upgrade to the next phone. You trade in your iPhone X, provided it's in good condition, and then you get the newest phone. That's a nice extra for die-hard iPhone fans.

Along with the £56.45-per-month cost of the iPhone X, you would still need to pay your mobile tariff on top. But the advantage of the iPhone Upgrade Programme is that the phone is unlocked — so you can choose a cheap, SIM-only deal. I'm currently paying £14 a month for 12GB of data, plus unlimited call time, with Three, which would make my monthly costs for the iPhone X £70.45 a month.

Don't get me wrong: it's still expensive. It's just works out as a lot less expensive than almost anything else.

Most people are paying too much by buying iPhones through carriers

Most British people still buy their phones on contract, CCS Insight analyst Ben Wood told me a few months ago. That means most people pay for the handset and a mobile tariff in a combined deal. This deal almost invariably works out better for the carrier, because they lock you into a 24-month contract and you end up forking out hundreds of pounds more than if you were on a SIM-only deal. If you break your iPhone and don't have cover, you're either stuck with a smashed phone for months, or you have to fork out a lot of money for repairs.

Here's an illustration: I just told you that my monthly cost for the iPhone X under the upgrade programme will work out as £70.45 a month. Over the 20 months I would be paying for the iPhone X, my total comes to £1,478. Once my year of cheap data with Three is up, I'm free to find another tariff with any mobile provider.

The pay monthly offers I found advertised were much more expensive than this and lock you in for two years.

Here's an example from EE. If you chose the two-year 3GB iPhone X deal currently advertised on its website, you would end up paying £1,691.75. A direct price comparison is difficult, because that's over 24 months, not 20 as with my earlier example. But that price excludes any kind of AppleCare-like insurance, or the ability to upgrade halfway through your contract, so it feels like worse value. It's ultimately at least £200 more than I would be paying, but for less data and less protection.

The pay monthly deals from O2 and, yes, Three look much the same. You end up paying hundreds of pounds more than you need to.

Most people are not committed iPhone bargain hunters

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The upgrade programme isn't for everyone, especially if you're really committed to finding a bargain.

It seems specifically more designed for people who know they'll be sticking with Apple, and who want the newest phones every year. That's not everyone. Upgrading every year is a luxury and, if you think each iPhone is just an incremental update on the last, it may not be worth the extra money. And depending on your view, the upgrade programme is a good way for Apple to push its customers to increasingly more expensive devices.

It's also worth examining the AppleCare+ coverage closely — it doesn't cover theft, or loss, for example.

And if you buy an iPhone X yourself, keep it in mint condition, then sell it when the next iPhone comes out, you'll ultimately save more money than just handing it back to Apple and upgrading to the next one, as you would with the upgrade programme.

But most people don't think about all of this — they just go to their carriers and sign up to expensive, limited deals in order to get the latest iPhone. And Apple's sales attest to the fact that lots of people love buying the new iPhones every year. The upgrade programme is, for now, a better value and underutilised way of doing that.

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