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Virgin Mobile testing handset financing

In the long run, prepaid is almost always cheaper. We’ve learned that repeatedly in the last year or so when prepaid carriers started adding higher end smartphones. Perhaps the most illustrative example came when Cricket and then Virgin Mobile started offering the iPhone. The handset itself was much more expensive, but when combined with the monthly service costs and extrapolated over a two-year span, the prepaid carriers come out significantly less expensive. Still, customers can have issues coming up with that much money in a lump sum. The answer, for at least some carriers, has been handset financing.

Last month we learned that Cricket and MetroPCS started handset financing programs. Unlike T-Mobile’s financing plan, which allowed customers to split up the charge over the course of the contract — making it nearly identical to a subsidy — Cricket and MetroPCS customers have nine months to pay the balance. They are charged no interest in the handset is paid in full after three months. While this makes sense from the consumer side, not all prepaid carriers have jumped on board.

Virgin is currently giving the financing idea a shot, according to FierceWirless. Using the company BillFloat they’re offering financing plans on a number of handsets, including boith iPhone models and the Samsung Galaxy S II. For buyers of the latter, the charge is $59 up front and $49 per month for a year, bringing the total cost to an unimaginable $647 for a smartphone that is nearly two years old. Another carrier trying something similar, C Spire, charges iPhone customers $170.50 up front and $150 per month for 6 months, for a total of more than $1,000.

If financing is going to work, it can’t simply ream customers who need to spread their payments over time. Cricket has something decent going with its three-month financing plan. That makes the cost of the phone a bit easier to bear without imposing enormous fees on the user. But $650 for a two-year-old smartphone and more than $1,000 for an iPhone, whether financed or not, is simply ludicrous. The ability to spread payments over time is valuable, but not at the cost of this much overall money.