O2 customers can now pay for top- of-the-range mobile phone and handheld devices by taking out personal loans in O2 stores at almost 23 per cent annual percentage rate (APR). The mobile phone company has joined up with GE Capital, a specialist provider of motor and equipment finance.
Under the Easy Pay scheme, customers who pass a credit check by GE Capital can repay the loan in fixed monthly repayments. The scheme applies to 15 phone models, each of which has a retail price of more than €199.
The APR on the GE Capital-O2 mobile phone loan is 22.99 per cent. This cost is high compared to interest rates available on standard credit cards, which typically have interest rates of between 16 and 19 per cent APR. The APR gives the total cost of the loan to the consumer.
Monthly repayments on a Nokia 7650 camera phone, which has a normal retail price of €399 for bill customers, are €38 per month over 12 months. The total cost of the phone for customers who choose the Easy Pay finance scheme will be €456, €57 above the upfront cost.
Monthly repayments on an O2 xda, which is a combined mobile phone and pocket computer, are €58.50 over 12 months, with the total cost of credit standing at €702.04. No deposit is needed under the Easy Pay scheme.
GE Capital also has a finance partnership in operation with Vodafone since the launch of its multimedia messaging service, Vodafone Live. Buyers of the Nokia 7650, the Panasonic GD87 and the Sharp GX10 camera phones can avail of the deal.
The cost of the credit for Vodafone products is slightly cheaper than for O2 phones, at an APR of 20.95 per cent. Monthly repayments on a Sharp GX10, which costs €299 for bill customers, are €23.06 over 12 months. An initial minimum payment of €49 is required upfront. The total cost of the phone for someone who takes out the GE Capital loan is €325.72, or €26.72 above the upfront cost.
GE Capital buys the devices from the mobile phone companies and manages the loans, including any default on payments.
GE Capital chief executive Mr Seán Webb said the finance deals made the latest mobile phone technology more accessible to a greater number of consumers. "Two or three years ago, the price of phones was so low they were largely giving them out, but they're now fairly chunky in price," he said. Customers are approved or rejected for the loans within an hour.
The loans were geared toward both younger consumers and early adapters of new technology, Mr Webb added. People must be over 18 to take out mobile phone loans, in compliance with Government rules on lending.
