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Having made its mark with its affordable mobile contracts or ‘goodybags’, giffgaff has just turned its attention to selling handsets with financing scheme that’s intended to make owning and buying a smartphone more flexible.

The network, which is run collaboratively by its members, is looking to disrupt a market that has become increasingly competitive, not to mention extremely pricey.

So, how does giffgaff’s offering work? And is it worth ditching your current provider and giving the scheme a whirl?

Read our five key things you need to know about giffgaff handset contracts and see for yourself.

1 Phone and bill costs are separate

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The basic premise behind giffgaff handsets is similar to O2’s Refresh service. You pay a monthly fee for the device and a monthly fee for minutes, texts and data.

The aim is to give you greater control over when you upgrade your phone, as well as seeing just how much your phone costs per month when your bill lands in your inbox.

2 You choose how long you take to pay

freedom handcuffs

Long mobile contracts have become standard across the mobile industry, helping to spread the cost of expensive devices, but also preventing tech-savvy users from upgrading to a new device more regularly.

giffgaff handsets gets round this by offering you the option to pay for your phone over a six, 12, 18 or 24 month period.

The interest rate you pay on the cost of the phone falls exponentially the longer your contract.

For example, a Samsung Galaxy Note 3 costs £50 up front and £25.14 a month over two years, at a total cost of £653.56, with an APR of 9.7%.

If you want a six-month deal and pay £50 up front, you’ll need to find £97.77 a month, with an APR of 25.8%.

Expensive? It certainly can be. But it's ideal if you want to own the device outright quickly, but can’t afford giffgaff’s up front price of £599 for the handset.

You can also decrease monthly payments by putting a larger amount down when you first buy. The SIM-free prices, however, are rather high.

Amazon offers much better deals, especially on the top-tier devices from Samsung and Nokia.

3 It uses peer-to-peer lending

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giffgaff is using a peer-to-peer lending system run by a company called RateSetter, which it says ‘cuts out the middle man’.

Essentially, it ditches banks and lets you finance the cost of your phone without them.

It means there’s no need for a full-on credit check and your credit rating won’t be affected.

That’s a huge plus, even if it does mean the rates are somewhat hefty if you choose to pay off your phone over a six-month period.

4 Pay up early and you won’t get charged

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giffgaff says that if you’ve got the money to buy your handset mid-contract, you can do so without being charged extra.

This is a bold move seeing as major networks are not fans of this kind of approach, often asking for your calls and minutes money as well as the cash for your device.

With these two things separate, giffgaff is able to take a more flexible approach.

5 There are 20 handsets up for grabs. And they’re all unlocked…

samsung galaxy note 3 multi-view

giffgaff has a range of 20 different devices up for grabs. These have been chosen by 5,000 of its members and include the following:

  • Samsung Galaxy S4
  • Samsung Galaxy Note 3
  • Sony Xperia Z1
  • HTC One
  • Samsung Galaxy S4 Mini
  • Samsung Galaxy Fame
  • Sony Xperia M
  • Nokia Lumia 925
  • Samsung Galaxy S3 Mini
  • Nokia 301
  • Sony Xperia SP
  • Sony Xperia E
  • Sony Xperia Z
  • Nokia Lumia 520
  • LG G2
  • Samsung Galaxy S3
  • Samsung Galaxy Young
  • Nokia Lumia 1020
  • Nokia Lumia 625
  • BlackBerry Q10

Each one is sold unlocked, so if you want to front up the final cost and move to another network at any time, you can.

Of course, there is one glaring omission: you can’t get the iPhone on giffgaff handsets.

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