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Cost of Cancelling Phone Contracts

Cost of Cancelling Phone Contracts

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Let’s get real here: Cancelling a cellphone contract feels like trying to break free from a clingy ex who just won’t take the hint. You know the drill – endless calls to customer service, mountains of paperwork. 

And sometimes cancelling early could cost you an arm, a leg, and maybe even your first-born child. Dramatic? Maybe. But so is the bill you’ll get slapped with if you dare to cut ties before your contract is up.

The reality is that most South Africans have cellphone contracts because we can’t afford to pay the full price for a cellphone in one lump sum. Contracts rose up as the easy alternative to get the brands you love at an affordable, realistic price. However, contracts come with their own chaos – and they’re often bundled with extra products that you don’t need, to pad out the price (like SMS; when was the last time you sent an SMS?). And when you get fed up and want to cancel, getting out of your contract is a battle you don’t want to face. 

In South Africa the biggest service providers include MTN, Telkom, Vodacom, and Cell C. So if you have a contract, you’re probably with one of these bad boys. And if you want to break your contract, you’re most likely gonna have to pay a hefty cancellation fee. Wanna know how much it costs? Let’s look at the numbers.

The Math Ain’t Mathin’

To calculate the amount payable with each provider, we’ll use the same scenario: You’re in a two-year contract for a phone that you pay R500 for every month and you want to cancel after a year, so you have 12 months remaining of your contract that you will have to cover. Got it? Good. 

First up: Vodacom. This cellular provider charges contract customers 75% of the outstanding balance of the full contract. R500 x 12 remaining months equals a R6000 outstanding balance; 75% of that sum leaves you with a R4500 cancellation fee. Ouch. 

MTN charges customers a full month’s payment, as well as the outstanding amount for the device alone. MTN separates the cost of the device from the cost of the plan, so in this scenario you’d be calculating the cost of the device times the remaining months, then adding the full monthly cost. 

So use the same scenario, except your R500 monthly payment is broken down by R400 for the device and R100 for the plan. Multiply R400 by the remaining months (12) then add the full monthly cost (R500) to that number. This leaves you with a R5300 cancellation fee. 

Let’s move on to Cell C. To calculate their cancellation fee, you’ll take the remaining value of the device and 50% of the remaining price of the subscription, then add those sums together. 

So, say you’ve got 12 months left of your R500 contract of which the handset is R400 and the subscription fee is R100 per month. The remaining price of the device is R4800 (R400 times the remaining 12 months). The remaining subscription amount is R600 (R100 times the remaining 12 months, divided by 50%.) Now you add the remaining device amount (R4800) and the remaining subscription amount (R600) to get a R5400 cancellation fee. 

Lastly, we’ve got Telkom, who make you pay the outstanding payments for the device as well as a R809 penalty fee. As in the previous examples, your R500 monthly payment represents R400 for the device and R100 for the plan. Multiply R400 by the remaining 12 months then add R809 to that number, leaving you with a R5609 cancellation fee.

Confused yet?

Subscription is the Way

Now, obviously, these numbers are pretty big, and pretty scary. Who has that money ready and waiting to just buy their way out of a contract?

We’re not a fan of contracts for this exact reason. They tie you into restrictive rules, with no freedom for you to change your mind unless you want to pay a very big price.

Now, if only there was a way you could change or cancel things without having to pay in a bunch of money… Oh wait, there is!

Rentoza subscriptions are all about flexibility. Subscribe to anything from phones to microwaves, and simply pay affordable monthly instalments. Wanna cancel? No worries. With Rentoza, you can change or cancel your subscription at any point in your subscription journey, completely penalty free. Try doing that with a cellphone contract and you’ll be met with laughter, tears, and possibly a repossession order. 

With a Rentoza subscription, there’s no need to do complicated maths sums that break your brain. No need to hand over a cent to get out of our subscription. No need to stress. 

Commitment is messy. Just Rentoza it. 

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