Sky Mobile Swap 24/36 explained: early upgrade phone contract

Sky Mobile’s phone contracts are based on finance

Your typical phone contract lasts 24 months and involves a monthly payment that covers the cost of your device and usage (minutes, texts and data) all in one payment.

But with Sky Mobile you get what is called a split contract. This is where you get one agreement for the cost of your device which essentially works like a loan and then another agreement for your usage.

What you’re paying every month is the sum total of both agreements. Split contracts have advantages and disadvantages, which we’ll cover further down the article.

Basically, it’s a 0% interest agreement. Some might argue that you’re spending more on the phone than if you had bought it from the manufacturer directly. But, business is business and networks need to make a profit.

Useful link: Sky's help guide about credit agreements

Payments reduced in the last 12 months of your contract

When looking at our pay monthly phone contracts comparison tool here or at the deals on Sky’s website, you might notice that you pay less in the last 12 months of your contract (on both 24 and 36 month contracts).

Remember that you’re essentially paying off a loan for the cost of your device. But with Sky you’ll be paying off the larger part of your contract at the beginning. Here’s why they do this:

Sky have weighted their contracts so that the amount you’ll have left to pay after your first 12 months is equal to the value of trading in your phone (only with them).

So when you roll into your final 12 months you’ll get options for upgrading early. You can accept this and trade in your phone, or you can ignore it and let your contract go by as normal.

The total cost of Sky’s phone deals can be made lower

These sorts of contracts make financial sense for mobile networks for accounting purposes to do with assets and liabilities. This in turn means that they don’t have to charge as much to turn a profit.

This helps the customer too as it keeps down the cost of their phone contracts. Similar networks that base their phone contracts on finance, like giffgaff, Tesco and Virgin top our phone price comparisons.

It also lets Sky offer most of their phone contracts without upfront costs, so you can get a contract without having to shell anything out right away.

But bear in mind that this is a loan. You should choose your phone deal wisely so that it suits your income and budget, the same as if you borrowed money from a bank.

Useful link: See current Sky Mobile offers

You have the choice to upgrade early

Since you’re paying a loan, you get the option to upgrade your phone early by using one of these methods:

1 Pay the remainder of your loan with your own money and keep your device

2 Take out a new loan for a new device while still paying off the old one

3 Trade in your current phone to Sky to pay off the rest of your loan

You can only upgrade after your first 31 days. We’d stay away from option 3 at least until the last 12 months of your contract as handing in your phone early could leave you with no phone and a loan to pay still.

We’d recommend options 1 or 2. We put option 3 in the disadvantages section of this page. In the end there are other ways of getting better value for a second hand phone and it could cause problems later on.

Useful link: How to actually do your upgrade

Set your contract length to suit your monthly budget

You get two choices of contract length on Sky: 24 months and 36 months. What you’ll pay overall for your device should be the same regardless of contract length.

If you want to pay less per month then you can go with a 36-month contract, spreading the cost over a longer time. If you want a shorter commitment and don’t mind a higher monthly cost then you can choose a 24-month one.

It’s nice to see that Sky don’t use their lower monthly costs on their 36-month contracts to sneakily up the price of the phone. But having an extra year of commitment means you’ll pay more for your usage.

Again, make sure you take a contract that suits your budget and that you can keep up with your monthly bills. Missing a payment could make it harder to get a finance agreement in the future.

You won’t overpay once your phone contract is up

With some networks if you forget to cancel your contract at the end then you’ll keep paying the combined cost as if you’re paying for a phone but without getting a new one.

This won’t happen to you on Sky because you’re paying separate finance agreements for the cost of the phone and your usage (which is basically a SIM only plan).

Once you’ve paid off your phone, all payments for it will stop. All you’ll have to pay after that is the cost of your usage, which is usually the same price-to-data ratio as their regular SIM only plans.

You can rest easy once your contract is up. You don’t have to rush to research new plans, nor do you end up wasting money on a phone you’ve already paid off.

Sky Mobile offer excellent benefits on top of this

We’ve seen what’s good about Sky’s phone contracts, but there’s also much to love about the network in general. You can read our full review of Sky Mobile here.

Sky benefit from being on O2’s network as they get excellent signal coverage (check yours here). All Sky customers also get 5G (so long as your phone is compatible) on O2’s expanding 5G network.

One of Sky’s best benefits is their piggybank system. The data you don’t use after each month goes into a “piggybank” that you can withdraw data from later, or trade in for discounts off phones or tablets.

Sky TV customers also get an exclusive benefit. You can watch any of Sky’s apps out and about in the UK without eating into your data allowance. It’s basically unlimited data to use their apps and comes on all plans.

Useful link: Read our full Sky Mobile review

Pay close attention to Swap names and contract lengths

A word of caution: when choosing your phone contract you have to pay extra attention to what you’re actually getting. Why is that?

Well, the names of the contracts can be a bit confusing. A Swap24 contract lasts for 36 months and a Swap12 contract lasts for 24 months. You can get Swap36 contracts for tablets that last 48 months.

It’s an odd way to present it. The number shown is the month after which you can upgrade without having to keep paying your contract (if you return the device in good condition that is).

Think of it this way. You either “upgrade after 24 months” and “upgrade after 12 months”. The actual length of the contract is 12 months added on top of those numbers. It’s a needless bit of faff really.

Useful link: Read Sky's FAQs on their Swap contracts

Sky’s credit checks can be tighter than other networks

When you’re taking a phone contract, the network are essentially taking a hit as they’re buying and shipping out a phone with little in return until you start paying back multiple months. They’re putting a lot of trust in you to pay them back.

This is why credit checks are necessary. Mobile networks will want to make sure you can pay them, so they’ll check your credit history to see if you’re good at keeping up with payments.

Sky are essentially giving you a loan. It works the same as a bank, with regulators making sure that they are loaning responsibly.

All of this means that they have to be strict on who can actually take a phone contract with them. Sky actually have stricter requirements than other providers (we have no insider information on their precise policy).

If you fail the credit check, Sky have an option called Credit Builder. This lets you start with a SIM only plan and lets you build a record as a customer. If you keep up with payments you may be accepted later on.

Useful link: Sky's full guide to credit checking

Sky’s “selling-point” for their phone deals is the choice they give you to upgrade early or Swap. Of course, after two or three years you may want a new device. But, we don’t like this scheme that much.

They have weighted these deals so that the amount you’ll pay for the last 12 months of your contract is what Sky will “pay you” for trading in your current device.

Basically, you send in your phone and they will let you upgrade to a new one. Because they’re buying the phone back from you, the rest of your loan is paid off.

Simple, no? It’s appealing as it takes out the hassle of selling your phone, or you can upgrade even if you don’t have the money to pay off the rest of your loan by ending your contract early.

Useful link: How to process your trade in

✖ Here’s why we don’t like this system

Think about it logically. When you reach your last 12 months you’ve already paid for most of the phone’s cost (making it almost yours essentially). So what’s the point of sending back your phone only to get onto a new loan?

Put it this way - your total device costs £1000. Over the first two years you’ve paid off £800, leaving £200 left. This £200 is what’s paid off. So you’re essentially surrendering your phone after paying £800.

All you’ve effectively done is rent a phone for two years, only to hop back on to a different loan. On top of that you have to make sure the phone is returned in good condition to get all that money paid off. It could be more trouble than it’s worth.

So what do we recommend instead? We still say get your phone contract from Sky, but once you’re at the end of your contract see how much your phone is worth second hand. You might get better value by selling it.

Useful link: Compare deals with us