Mobile network Three has followed Apple in offering an interest-free payment scheme which lets you buy a new iPhone 7 in monthly instalments without paying a penny in interest – but you will need to commit to a 12-month Three Sim-only contract.

Update Tuesday 25 October: Three is no longer offering this 0% finance deal, though you can still spread the cost of an iPhone 7 or iPhone 7 Plus interest-free via Apple. Three's told us it will let us know if and when it decides to bring it back.

Getting a new iPhone is never MoneySaving – but if you're going to do it anyway, make sure you do it the cheapest way. If you can't buy one upfront, Apple and now Three's interest-free deals smash networks' traditional contract deals.

Three Flexible Finance allows you to get a new iPhone 7 and iPhone 7 Plus paying nothing upfront – unlike the £49 required for Apple's iPhone Payments plan – and you can spread the cost over 24 months. With Apple it's just 20.

And unlike Apple, Three lets you apply for its interest-free scheme online, which makes it a handy alternative if you live nowhere near an Apple Store.

But crucially, while you get an unlocked phone, you can't choose any Sim you like, as with Apple – instead, you have to commit to one of four one-year Sim-only contracts from Three. Here we explain how it works and see how the two interest-free deals compare - see our Cheap iPhones guide for more cost-cutting tips.

Martin Lewis
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How Three Flexible Finance works

Three's new interest-free scheme is only available for the new iPhone 7 and iPhone 7 Plus, and you'll need to pass a credit check for what is a loan provided by Barclays. For full info and FAQs, see Three's website.

You can choose to repay the loan interest-free over 12 or 24 months (you can also choose to repay it over 36 months, but in that case there's a 13.9% APR).

If you buy it interest-free, the phone itself won't cost you any more than it would if you bought it upfront from Apple. For the iPhone 7, it's £599 for the 32GB model, £699 for 128GB and £799 for 256GB. For the iPhone 7 Plus, it's £719 for the 32GB model, £819 for 128GB and £919 for 256GB.

However you'll also have to choose one of four selected 12-month Sim-only deals from Three (all of which include 4G data and unlimited texts):

  • £6/mth: 500MB/200 mins 'Essential' plan
  • £21/mth: 4GB/unlimited mins 'Advanced' plan (incl free 'Feel at Home' roaming in 42 countries and tethering, ie, sharing your phone's data with a laptop/tablet)
  • £23/mth: Unlimited data/200 mins 'Advanced' plan (incl free Feel at Home and tethering)
  • £24/mth: 30GB/unlimited mins 'Advanced' plan (incl free Feel at Home and tethering)

Three takes on Apple with rival interest-free iPhone 7 deal
Three's Flexible Finance plan will let you repay your loan over 12 or 24 months

How does Three's deal compare?

Let's be clear – this deal is far cheaper than the traditional contract tariffs offered by networks, which bundle the handset cost and service together. But how does it stack up against Apple's own interest-free deal?

In the table below we've outlined the key differences, and then compared the cost of a 32GB iPhone 7 with the best available Sim for a low, medium and high user. We've selected the Sim-only plans based on UK data allowance, though it's worth noting some Three plans come with additional benefits, such as free roaming.

Three vs Apple iPhone 7 finance plans

  Three Flexible Finance Apple iPhone Payments
Interest 0% APR 0% APR
Upfront cost None £49
Loan period 12 or 24 months 20 months
Choice of Sim One of four 12mth Three Sims Any
Availability Online only In-store only
Total cost of iPhone 7 (32GB) over two years incl Sim (1)
For low user 500MB, 200 mins £743 1GB, 250 mins (iD Mobile, £5/mth) £719
For medium user 4GB, unltd mins (2) £1,103 4GB, unltd mins (Three Essential, £9/mth) £815
For high user 30GB, unltd mins (2) £1,175 30GB, unltd mins (Three Advanced, £24/mth) £1,175
Prices correct as of 23 Sep. All allowances come with unltd texts. (1) Assumes cost of Sim remains unchanged over 2yrs. (2) 'Advanced' plan – incl free roaming in 42 destinations.

Ultimately, the best option for you depends on your circumstances:

  • Three's interest-free plan is available online while Apple's is in-store only - which may make Three more convenient, particularly if you live far from an Apple store.
  • With Three you pay nothing upfront and you can spread the cost slightly longer, which is a slight advantage over Apple.
  • Apple gives you complete freedom to choose the best Sim-only deal for you, while with Three you're restricted to a choice of just four 12-month Sims.

    This means that for most users getting the handset from Apple and pairing it with a separate Sim-only deal will work out cheaper than getting the phone and Sim from Three. But if one of the Three Sims suits your needs anyway (as the table above shows, its 30GB Sim-only deal is a good bet for heavy users), then Three may edge it.

How to get Three Flexible Finance

If you do decide it's right for you, Three Flexible Finance is available online right now (though all the major networks have been hit by the limited supply of some models, so if you want one of them you may have to wait several weeks for delivery).

  1. Go to the iPhone 7 or iPhone 7 Plus page on Three's website and select your colour and storage capacity, then click the blue 'Three Flexible Finance plans' button.

  2. Select one of the four Sim-only deals you want to pair the handset with.

  3. On the next page click 'Choose your Finance plan now'.

  4. At the checkout enter your details, including your name, age, address, employment status and payment details. On the final page you'll be credit-checked by Barclays and then told if you've been accepted almost immediately.

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