ZTE unveils its own direct-to-consumer smartphone leasing program

ZTE is beating larger rival Samsung Electronics to market with its own lease-to-own payment plan for U.S. smartphone customers, following in the footsteps of Apple (NASDAQ: AAPL), which last month introduced a direct-to-consumer device leasing program.

ZTE Axon Pro

ZTE said the program is designed for customers who want to pay for their phone or other mobile device over time and spread out their payments to make it more affordable. The lease-to-own payment option is provided through SmartPay Leasing Inc. and will be available online for all customers beginning soon at www.zteusa.com. However, ZTE did not provide an exact date for when it will start and a spokeswoman did not immediately respond to a request for comment.

With SmartPay, ZTE said customers can get an immediate approval to lease ZTE devices, from high-end smartphones to entry-level devices and smart projectors. If approved, customers select the ZTE device they want, make their first payment at checkout and make scheduled monthly payments thereafter. Importantly, ZTE noted that $0 to 25 percent of a customer's lease amount could be due when they complete checkout, and a debit card is required.

The length of a lease plan is determined when customers apply and can range from six months to 24 months. Once all payments are made, the lease is complete and customers own the device. Customers can also pay off their lease early without any penalties or future fees, ZTE said.

If customers are up-to-date on their monthly payments they can cancel their lease at any time and upgrade their device by simply returning their current device in good working order to SmartPay. Once the phone is received the lease is cancelled and customers are free to get the new device they want.

The ZTE program covers unlocked devices and said the program is aimed at customers who might not have a stellar credit history. The OEM also wants to let customers take leased devices to compatible carriers and claims it is not trying to encourage upgrades but instead bring flexibility and choice to the market.  

"We are introducing leasing options because we believe advanced mobile technology should be available to everyone. We also want the experience of purchasing and using a ZTE device to be easy for any consumer," Lixin Cheng, CEO of ZTE USA, said in a statement. "How customers want to pay versus the amount they are comfortable paying are equally important – and ZTE can provide the best of both worlds."

Leasing programs from OEMs and not from carriers could engender more brand loyalty for the device maker instead of carriers. ZTE hopes to build on the momentum it has found as a supplier of devices for prepaid carriers and get customers to try out its higher-end phones like Axon Pro. According data from research firm Strategy Analytics, in the second quarter ZTE was the No. 4 U.S. smartphone player, behind Apple, Samsung and LG Electronics.

Samsung plans to launch its own direct-to-consumer device leasing program in the U.S. for its Galaxy smartphones, according to a September Forbes report. The report, citing an unnamed industry executive with knowledge of Samsung's plans, said that Samsung could launch its leasing program in the next several months, although it could happen sooner. The precise pricing for Samsung's leasing program could not be determined, the report added. 

Meanwhile, under Apple's iPhone Upgrade Program, which starts at $32 per month and allows users to upgrade their iPhone every year, customers get an unlocked iPhone 6s or iPhone 6s Plus with the Tier 1 carrier of their choice, and Apple's AppleCare+ warranty service.

Apple's program supports service from the big four nationwide wireless carriers: Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE: T) T-Mobile US (NYSE:TMUS) and Sprint (NYSE: S). Users can purchase one new iPhone every year. Prices for the service start at $32 per month for the 16 GB iPhone 6s and increase to $45 per month for the 128 GB iPhone 6s Plus. The program is financed through Citizens One Personal Loans.

For more:
- see this release
- see this CNET article
- see this PhoneScoop article

Related articles:
Thanks to AT&T, T-Mobile and Sprint, ZTE knocks Huawei to become #4 U.S. smartphone vendor
Report: Samsung to start leasing Galaxy phones directly to consumers, following Apple's lead
AT&T not threatened by Apple's handset installment plan
Apple's iPhone Upgrade Program should worry carriers for 1 big reason: it makes them less relevant
Apple counters carriers' EIP with iPhone Upgrade Program: new phone every year starting at $32/month
ZTE's Lam: Company shines in U.S. prepaid device market with 21% share

Correction, Oct. 15, 2015: This article incorrectly stated that the ZTE program covers both unlocked and carrier-locked devices. In fact, it only covers unlocked devices.