Apple’s iPhone is a remarkable device and iPhones can be expensive, particularly if you aren’t armed with some useful information.

iPhone can be bought from official sources like Apple, AT&T, Verizon, Sprint (in the US). This generally requires a 2 year contract. The problem with signing a contract is that you won’t have freedom in picking a carrier of choice. For instance, you have service with AT&T and you want to jump ship to Sprint who is willing to offer true unlimited data or cheaper unlimited calling option. In this case, you may have to fork out about $350 or less depending on the carrier.

Cons of signing a contract :

• 2 year contracts limit your carrier freedom. You cannot switch to a carrier of your choice without paying ETF (Early Termination Fee – starts around $350).
• No fun if a new iPhone is released every year! The first year, you will get a subsidized iPhone and the second year you have to fork out the extra cash.
• Limitation on the devices – GSM or CDMA handsets. Verizon & Sprint uses CDMA while AT&T & T-Mobile use GSM. GSM handsets work in most countries worldwide while CDMA, not so much!

If you are stuck with a 2 year contract and/or if you prefer paying month-by-month (carriers force you to sign a contract the moment you buy a subsidized handset), then your best bet are the following 3 sources :

• Craigslist
• eBay
• Apple

Craigslist

This is my favorite source and often the cheapest of all. Some tips while dealing with people on Craigslist :

• Never use your personal email to communicate with the seller. Definitely not your work email! Make one up and forward emails to your personal email. GMail is your friend.
• Never use your mobile phone number either. Sign up for a free phone number (Google Voice – free texts and calls to US and Canada). It requires data to call the seller but is much more secure than using your actual number.
• Never meetup with the seller at a private location. Malls, Apple store or even McDonalds/Burger King are highly recommended. ATMs are bad places and should be avoided whenever possible.
• Ask plenty of questions about the iPhone – is it new or used? Any warranty left on the device? Cosmetic condition if used. Any water damage to the iPhone. Apple employs multiple water sensors within the iPhones. 3.5mm headset jack or the port where you connect the charging cable are two visible areas of water damage. If you see a red tinge in those areas – it sure is a red flag for warranty purposes.
• What price to offer the seller? Start off by researching on Craigslist for prices quoted by other sellers. I would start off with the lowest price for best offer type listings. You should take into consideration the cosmetic condition, warranty, water damage,.. while offering a price. In case of a fixed pricing set by the seller, if the description meets your needs and the price is nothing crazy (close to what Apple is selling unlocked), then you are good to go. If there is no warranty left on the device (generally if used for an year or more), then technically water damage is not a deal-breaker as long as the device works physically.
• If the price is too low, it is often times a scam/website/fake item. This one seller looked shady and he whipped out some knock-off iPhones. It is always good to take your friend with you to the meet-up location, tech-savvy friend helps!
• One important thing to note is the touchscreen. This one lady tried selling me an iPhone with flaky touchscreen. The iPhone was showing an activation screen and there are only so many things you can do to test the screen. Hit the keypad like crazy, make sure all key presses are registered. Always ask for an activated iPhone. This way, you can check the speaker and touchscreen to make sure your prospective iPhone is free of defects.

Risks with Craigslist :

Often times, the transactions are all in cash. You are responsible for examining the condition of the iPhone. Repairs can be costly, so don’t rush when dealing with strangers. Ask a lot of questions and examine the handset carefully. There is no governing body like PayPal which protects you from eBay purchases.

eBay

iPhones on eBay are often more expensive to buy. The main reason being the costs involved for the seller – eBay fee + shipping/insurance charges + PayPal fee. These charges amount to a big chunk of the sale price!

The main advantages of using eBay for online purchases are the following :

• You can contact the governing body (PayPal) if something goes wrong with the transaction. Peace of mind.
• A wider geographical reach, so more sellers to choose from. Sellers are wary of their seller ratings and better the ratings, better the buying experience.

 Step by step :

• Search for the iPhone model on eBay and limit to ‘Buy It Now’ to gauge the average price. Bidding is an option too but I generally lack the patience since bidding doesn’t always get you the best price.
• Start asking the sellers about the condition if used, water damage if any, hardware issues and the like. Most state the issues in the listing description but some cleverly state the defects of the item buried in the description.
• If a seller is too busy to answer, try another one. There are plenty out there and if it is listed as brand new coming from a reputed seller – look no further if the price is right!

Apple

Apple is the safest but the most expensive options of them all. Well, a retailer generally doesn’t discount the products they offer. Apple factory unlocks the iPhones they sell. They used to be a premium till recently but now that the carriers are willing to unlock the iPhone themselves, eBay or Craigslist are a better bet. AT&T unlocks out of contract iPhones  whereas Verizon ships the iPhone 5 unlocked out of the box! iPhones came a long way. I still remember SSHing into the iPhone to unlock the original iPhone. Jailbreaking and unlocking by free means are still a lot of work and not to mention, a major pain!

Unlocking the iPhone :

Now that you bought an iPhone using your amazing bargaining skills on Craigslist or to some extent on eBay, you can proceed to unlocking your handset.

• Unlocking the iPhone for free is possible depending on several parameters – iPhone model, baseband version, iOS firmware version, technical skills,.. Keep an eye on this website for latest updates.
• Your carrier might unlock it for free as well but there tend to be stricter rules – on contract, term remaining,.. It doesn’t hurt to ask your carrier. AT&T iPhone unlock request can be done here.
• iPhone can be unlocked by 3rd party sellers on eBay. I am yet to personally test this. Previously, Apple strictly enforced any IMEI based unlocking owing to AT&T’s exclusivity agreement. Not anymore. Carriers themselves are willing to unlock your iPhones and some 3rd party sellers too.
• I suggest staying away from Gevey SIM or other proxy sim based unlocking solutions. It might be illegal to do so in some countries and also flaky when it comes to the actual unlock.

Hope this helps someone save some money. In my opinion, Craigslist is the right way to go if you can do your own research as described above. eBay is an option if there aren’t enough items listed on Craigslist in your geographic area. Let me know if you have any questions or tips to share in the comments section below.