Exclusive: Borrowers buy pricier iPhones, CIRP study shows

June 12, 2014, 10:57 AM UTC

Sticker price matters, as Apple (AAPL) discovered in India when it introduced financing plans that cushioned the shock of a Rs 45,000 ($830) iPhone 5S by letting customers pay one third upfront and the rest in monthly installments.

Sales took off.

Financing has also come to the U.S. mobile phone market — but with unexpected effects.

Traditionally, U.S. carriers have offered subsidies that spread the full cost of a mobile phone over the life of a contract. That’s why an iPhone 5S that sells in the U.S. for $649 can carry a sticker price of $199.

Plans like AT&T’s (T) Next, which offers interest-free 24-month financing, have changed that equation.

Fortune has obtained a study by the Consumer Intelligence Research Partners that found, counterintuitively, that customers who finance an unsubsidized phone tend to buy a more expensive phone.

In particular, CIRP found, the iPhone 5S accounts for 73% of financed iPhones, compared to 61% of all iPhones. (See chart.)

“The move away from subsidized phones has given an unexpected boost to the iPhone 5S in the U.S.,” says CIRP’s Josh Lowitz. “A decision whether to buy a subsidized iPhone 4S, 5C, or 5S means a big difference in spending, $100, $200, or more, or immediately spending double or more. In contrast, unsubsidized phone prices tend to differ by about 20%, and when they are broken into 24 payments, they are truly marginal.”