So how does this option stack up against the other ways to get your hands on the iPhone 4S?
What is leasing?
O2 Lease gives would-be iPhone users the chance to effectively ‘rent’ the handset from O2 for 12 months without paying an up-front fee, as long as they hand the phone back at the end of the year.
A monthly fee of £55 on the O2 Lease scheme gets you an insured 16GB iPhone 4S for the year with 750 minutes, unlimited texts and a 500MB data allowance. For £65 a month you can have an insured 32GB handset with the same allowances.
In a ‘fine’ condition
If you return the phone in poor condition, O2 will charge you accordingly. Here’s how the charges work for a 16GB handset.
O2 won’t fine you if you return the phone in good condition, and will even let you off if the handset has a few small scratches.
Noticeable cracks and serious scratches would cost you at least £78 on return of the handset whereas an operational handset with some functional and cosmetic faults could cost you as much as £156.
Damage the phone to the point where it doesn’t function, or is “excessively damaged” and you’ll be fined at least £228. If the handset is damaged beyond repair or you simply don’t return it, O2 will be sending you a bill for £300.
O2 does state: “The relevant charges are given to the customer before they decide to take O2 Lease so there should be no surprises.”
Why would anyone lease?
Leasing allows you to get a new handset in 12 months, which is a sooner than many contracts which tie you in for 18 or 24 months. There are some 12 month contracts on the market, but you usually pay a premium for the privilege.
Based on the numbers alone, leasing might look like the less attractive option. Simple maths will show you that O2 Lease will cost you £660 (including insurance) for the year.
Best iPhone 4S contracts
By comparison, a 12 month 4S contract with Tesco with similar allowances would cost you £35 a month, plus an up-front fee of £235. Over the year that brings you to a total of £655. This doesn’t include insurance, however.
There are loads of attractive iPhone 4S deals available. Three’s iPhone 4S deals range from £30 to £43 a month and you can even get the handset for free on a 24 month contract, with 300 minutes, 5000 texts and 500MB data allowance.
Orange offers the 4S handset for free if you spend at least £46 a month and T-Mobile’s 4S tariffs start at £25.54 a month, with a handset cost of £239.
You can also get a free handset from Vodafone if you’re willing to pay at least £46 a month and contracts are available for 12 month periods, though the monthly cost increases as contract periods get shorter.
You’ll find more on these and other iPhone 4S tariffs on our mobiles channel.
Is it better to buy?
You can buy a SIM-free 16GB 4S directly from Apple for £499, and you’re then free to sell the phone whenever you like.
This could be a good option if you’ve looking forward to the inevitable release of the iPhone 5, expected mid to late 2012, as you won’t be tied in to any contracts.
A good indicator of what you might get for your 4S is to look at the current price you’d get for recycling an iPhone 4. In good working order, an iPhone 4 can fetch as much as £230 second hand. A good condition 4S might fetch a similar amount in 12 months’ time.
Even if you don’t have an iPhone, your mobile handset will be worth something. So next time you upgrade to a new phone, trade yours in. Find out what your mobile is worth.
With many other competitive iPhone tariffs on the market you might just as well see if you can shop around for a better deal on a contract and then sell the handset at the end to reimburse you for the initial cost.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.