Can RENTING a cell phone save you hundreds of dollars a year?

Smartphones are becoming more and more expensive, with the latest models often running into the thousands.

And despite the high cost, many users abandon their device within a few years when a newer model comes out.

Not only is this disposable approach hurting people’s wallets, it’s also bad for the planet – as phone batteries contain hazardous substances that can leak into the environment.

A solution to this problem is now offered in the form of telephone subscriptions, which allow consumers to lease a handset for less instead of buying it.

Raylo is a mobile phone subscription service that says it can save consumers on their bills

The latest launch is Raylo, which recently received funding from venture capital firm Octopus Ventures.

The company allows people to lease cell phones for 12 or 24 months, and says it will… tackle the waste caused by the ‘buy-and-throw’ cycle of people throwing away their phones every two years.

It also claims it can save consumers hundreds a year.

For example, a customer can: lease an iPhone 12 for £22.99 a month through Raylo, without paying upfront.

If they then opted for Three’s 12GB Sim-only contract for £12 per month, they would spend a total of £34.99 per month.

If they took out an Unlimited contract on the same phone with Three – meaning they would own the handset when the contract ended – it would cost them £82 a month.

This is Money takes a look at how Raylo works and asks if subscription models are really the future of phone ownership.

How does Raylo work?

Customers looking for a subscription phone can choose a new or refurbished model on the Raylo website and bring it with them a 12 or 24 month rental contract on the handset.

All Raylo phones are sold without SIM cards, so the buyer must either use their existing SIM or sign a new SIM-only contract directly with their network.

However, Raylo promises that its model will still be cheaper than buying a handset and a subscription to a mobile phone network.

Options currently available include a refurbished iPhone XR for £13.99 a month and a brand new Samsung Galaxy S21 for £27.99 a month.

The brand new phones come directly from Apple and Samsung authorized distributors in the UK.

In the long run, Raylo wants to source all of its refurbished phones from its customer base when they choose to upgrade to a newer model.

But right now, it’s supplementing its offerings from other sources, such as cellular networks and manufacturer trade-in programs.

All Raylo Refurbished phones undergo a rigorous 70-point check and benefit from a full warranty during the lease term.

At the end of the lease, customers can opt for a free upgrade, whereby the old device is collected, refurbished and rented out to the next customer.

When a device eventually reaches the end of its life, it is sustainably recycled by Raylo’s partners.

The smartphones will be used for 6 years, which Raylo says addresses the issues of underutilization and waste.

Each phone also comes with a free eco-friendly case and screen protector.

Raylo says consumers can lease an iPhone 12 for £22.99 a month without paying upfront

Raylo says consumers can lease an iPhone 12 for £22.99 a month without paying upfront

What is Raylo’s purpose?

More and more people are used to paying a subscription to access everything from a car to their favorite music. However, most still rely on a two-year buy-and-dispose cycle when getting their smartphones.

Raylo said this is both costly and bad for the environment.

Old devices inevitably end up in drawers while still perfectly usable, with the average smartphone only using 40 percent of its potential life.

According to Raylo, there are an estimated 125 million smartphones in ‘sleep’ mode in the UK.

The company believes each of its devices can be used by a total of three customers for 6 to 7 years – a lifespan that is almost 200 per cent longer than the UK average of 2.31 years.

It said that if all European smartphone users switched to a rental model, it would save 8.9 million tons of CO2 per year – the equivalent of taking 6.6 million cars off the road every year.

Karl Gilbert, co-founder and CEO of Raylo, said: “Raylo is the technology that is driving a world where fewer consumer devices are manufactured and devices have longer life through our managed cycle of refurbishment, reuse and recycling.

“We believe that leasing delivers a fundamentally better experience and value for customers, and a materially more sustainable outcome for all of us.

“We want to be known for leading the change in the way people access consumer technology, and over the next 6 to 12 months we will be expanding both our product range and distribution channels.”

Where else can I rent a phone?

Raylo isn’t the only other company where consumers can rent a smartphone.

Below we have listed some of the other options on the market.

Music Magpie: The online retailer started renting out refurbished phones in December last year.

The subscription service rents refurbished mobile phones from £8.99 per month with the option to upgrade to a newer model every 12 months for free.

The minimum period to rent a phone is 12 months and at the end of that period customers have the choice to upgrade their device to a newer model for free, keep their existing model and pay less each month, or change their phone to return.

Click here for more information.

O2: The network says it offers smartphone rentals, and the website claims it “provides customers with tailor-made smartphone solutions, both at home and abroad, whether for short-term or long-term rental.”

It says it has an extensive fleet that includes a wide range of available devices, but has no further information on how much it may cost and how long it has been offering this service.

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