Three's Flexible Finance plans explained: how they work

Three used to offer flexible credit agreements over a contract length of your choice

In the past, Three have experimented with basing their device plans around what they called “Flexible Finance”. They worked a lot like working out a finance agreement for a car or anything else based around credit.

You could choose the length of your contract from three options (12-month, 24-month and 36-month). Shorter contracts meant 0% interest, while longer contracts meant lower monthly payments.

Your usage plan (minutes, texts and data) was a separate payment to pay off the cost of your phone. If you upgraded early you could also change your SIM only plan or leave Three altogether.

These two payments were rolled together to make your overall monthly bill.

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What are the pros and cons of each contract length?

The best thing about being able to choose your credit agreement was that you could suit it to how much you’re willing to pay per month or how soon you want to pay it off. All of these required you to pass a credit check first.

If you took a 12-month credit agreement you got the benefits of paying off the cost of your phone sooner and you won’t be subject to interest. But you’d also be paying more per month, which won’t suit everyone’s budget.

By taking a 24-month agreement you would be paying much less than you would on a 12-month plan for the same phone per month, while also paying no interest. But you couldn’t leave Three as soon.

Finally, with a 36-month agreement you would have the cheapest monthly bill. But since you were paying it off over such a long period you’d have to stay on Three for a long time and you also had to pay interest at 13.9% APR.

Useful link: What if you’ve failed a Three credit check?

What sorts of phone models were available with Three’s Flexible Finance?

It really shows how long ago Three got rid of their Flexible Finance contracts that the latest model they offered on these was the iPhone 7 and iPhone 7 Plus.

These were actually the only pay monthly phones that were offered on these contracts. And since then no other model has been offered on one.

If they introduce a new finance scheme like Flexible Finance, then we could see them dipping their toes in with a few high end models. Then if that works out for them they might make all their phone models available on finance.

At the end of the day we have no insider information on it. All we can do is guess.

Useful link: See Three’s current phone contracts

Did Flexible Finance plans work out cheaper than regular contracts?

Back when Three offered the iPhone 7 on both Flexible Finance agreements and regular phone contracts we were able to directly compare the prices.

An iPhone 7 with 32GB of storage over a 24-month Flexible Finance agreement worked out at £1175.04. On a regular phone contract it worked out to £1155.00, with a £99 upfront cost included in the total.

So regular phone contracts were a little cheaper than Flexible Finance ones. But you didn’t have to pay upfront costs with their Flexible Finance agreements and you could choose a longer contract length to reduce monthly costs.

While their Flexible Finance agreements might have been slightly pricier overall, some might see the extra flexibility as being worth it.

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Why it was harder to be accepted for a finance agreement than a regular phone contract

Taking out a finance agreement from Three was essentially the same as taking out a loan to cover the cost of the phone or device you’ve taken out, while paying it back in monthly instalments.

Three used to work with Barclays to administer the loan. They would have to prove to government regulators that they were loaning responsibility and make sure you would be able to make your payments.

It was the same as taking a finance agreement with any other network. They would check your history of making payments, such as personal loans or other direct debits to make sure you could pay them back on time.

If the bank didn’t think you were suitable for a loan they wouldn’t give you one. But you still had the chance to be accepted for a regular phone contract on Three.

Useful link: Have you failed a credit check with Three?

Why do networks offer deals based around loans?

We’ve gone over the many customer benefits of taking out a finance agreement instead of a regular phone contract, but what are the mobile networks getting out of offering these deals?

Think of it this way. With a regular contract the network might pay £500 for a phone to give to a customer who was paying it back at £40 a month over a 24-month contract.

At the end of the contract the network would have made a profit, but until the first 12.5 months in this example the network has lost money. And that doesn’t take into account the chance of fraud.

But by offering a handset on finance, the network buys this £500 and the loan to the customer is made by the bank instead. The network gets the revenue back immediately without much of the risk.

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