Can You Sell a Phone That Is Not Paid Off? Legal Options for Financed iPhones
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60-Second Summary
Yes, you can sell a financed phone, but you are not the legal owner until it is fully paid off. The easiest and safest way to sell a financed phone is to pay off the balance first. However, there are other options that are riskier.
Financed Phones Legal Status
- You are not the owner: Legally, the carrier/financing company has rights to the device until the balance is paid off in full.
- Contract terms are key: See your specific financing contract terms on sale restrictions
- Financing agreement terms
- Legally a gray area: Selling a financed phone is not outright illegal, but depends on contract terms and buyer disclosure.
Your Options to Sell (Ranked Safest to Riskiest)
1. Pay off your Balance First (Safest, Best Option)
- Contact carrier and ask how much it will cost to pay off the balance
- Make the lump sum payment and get a written payoff confirmation
- Highest resale value (phone will be unlocked)
- Or see our financing program: Sell your phone to BankMyCell
- Sell for Cash option does not require upfront payoff costs.
2. Sell Your Phone and Keep Making Payments
- Continue making monthly financing payments after sale
- High Risk: You are liable for all payments
- Phone will get blacklisted if you do not continue paying
3. Transfer Financing Agreement to Buyer
- Transfer both the device and financing responsibility to the buyer
- Buyer has to qualify for credit and visit carrier in person
- Only option with certain carriers (AT&T, Verizon)
4. Sell to Carrier/Apple as Official Trade-In
- Trade-in to carrier/Apple and put value toward a new device purchase
- The trade-in value will be applied to the new device and you will roll the remaining balance into new financing
- Cannot sell to third party, only trade toward new device
Damnations to Avoid
- Financial liability: Full balance becomes immediately due, credit is damaged, blacklisted, goes to collections.
- Device blacklisting: Phone is rendered completely inoperable, blacklisted on all mobile networks, world-wide.
- Legal ramifications: Possible fraud/theft/breach of contract charges.
Selling Legally: Best Practices
- Full disclosure of financed status to buyer and written proof of disclosure
- Written agreement from the buyer, includes bill of sale (IMEI), price, and payment responsibility
- Escrow services for high dollar items
- Escrow services
Alternative Options
- Early upgrade options: Programs are offered after 50% of contract paid or 12 months.
- Carrier hardship programs: Temporarily suspend the service, while you continue to make monthly payments.
- Financing/refinancing through another carrier: Unlock your device and get new terms
Bottom Line: The best way to sell a financed phone is to pay it off before selling. This removes all risk and you will get top value since it is unlocked. If this is not an option, then fully disclose to buyer in writing and require the buyer to sign a written contract. You remain financially liable for the device and all payments even after selling.
Alternative Solution: Can’t afford to pay off your financed phone before selling? BankMyCell accepts financed iPhones and partners with reputable buyback stores with the resources and experience to navigate the complexities involved with taking possession of and buying out financed phones. Get competitive offers and work with companies that have transparent policies that work with not-paid-off phones and are upfront and clear about all obligations so you can understand all fees, closing costs and requirements to turn your financed device into cash.
| TODAY'S BEST iPHONE BUYBACK OFFERS | |||
|---|---|---|---|
| Device | Financed | ||
| iPhone 16e | $510.00 | Compare | |
| iPhone 16 Pro Max | $1150.00 | Compare | |
| iPhone 16 Pro | $1045.00 | Compare | |
| iPhone 16 Plus | $705.00 | Compare | |
| iPhone 16 | $650.00 | Compare | |
| iPhone 15 Pro Max | $820.00 | Compare | |
| iPhone 15 Pro | $830.00 | Compare | |
| iPhone 15 Plus | $570.00 | Compare | |
| iPhone 15 | $535.00 | Compare | |
| iPhone 14 Pro Max | $790.00 | Compare | |
| iPhone 14 Pro | $720.00 | Compare | |
| iPhone 14 Plus | $325.00 | Compare | |
| iPhone 14 | $320.00 | Compare | |
| iPhone 13 Pro Max | $650.00 | Compare | |
| iPhone 13 Pro | $560.00 | Compare | |
| iPhone 13 Mini | $370.00 | Compare | |
| iPhone 13 | $400.00 | Compare | |
| iPhone 12 Pro Max | $370.00 | Compare | |
| iPhone 12 Pro | $290.00 | Compare | |
| iPhone 12 Mini | $180.00 | Compare | |
| iPhone 12 | $200.00 | Compare | |
| iPhone 11 Pro Max | $245.00 | Compare | |
| iPhone 11 Pro | $245.00 | Compare | |
| iPhone 11 | $165.00 | Compare | |
| * Best market prices updated August 22nd 2025 | |||
Data Source: BankMyCell compares over 100,000+ quotes and customer reviews from 20+ trusted buyback stores every 15 minutes via our data feeds, making us America’s #1 time-saving trade-in supermarket.
Disclaimer: You can sell financed iPhones, but you are still responsible for the finance payments. The sale does not end your responsibility to continue your contract payments. Always check your carrier’s terms if you are not clear.
Thinking of selling your phone even though you haven’t finished making all the monthly payments?
You’re not alone if you’re an iPhone owner who would like to upgrade before you’ve made all the payments on your device.
On the other hand, whether because a new model has been released and you can’t wait to get it or because your economic situation has changed and you need to sell your iPhone, you are in the dark about how to do it legally.
What It Means to Have a Financed Phone on a Payment Plan
Getting an iPhone with monthly payments is like taking out unsecured credit worth the retail value of the device. So what is the legal status of such a device? Is it still your phone? The truth may surprise you.
The reality is that it’s not as straightforward as most people may think since this is a legal relationship between three entities: you, the mobile device, and the financing party.
The Real Owner of Your Financed Phone
No matter how much time has passed and how long you’ve been making payments, you are still not the owner of the phone if you have an agreement to pay monthly until it is fully paid.
Just like a financed car or home, you are the possessor and user of the device, but the financing party still retains a legal right to the item until the debt is paid in full.
This also means:
- The carrier or financing party has the legal right to the device
- The device could be remotely disabled once the monthly payments stop
- You likely have a legal obligation to continue service for the duration of the monthly payments
- Most financing agreements have terms and conditions prohibiting certain actions regarding the device
Types of Phone Financing Arrangements With Carriers
There are different types of plans depending on the company offering you monthly payments. Most carriers are using different methods of financing their deals.
- A financing plan from the carrier (AT&T, Verizon, T-Mobile, Sprint) usually has a phone contract
- Apple iPhone Upgrade Program
- Store financing programs (Best Buy, Walmart, etc.)
- Financing with your bank or credit card.
Want to think more about it?
What matters legally when it comes to your options when selling a phone that is not paid off are the terms of your particular agreement. It’s these that matter to the real question of whether you can sell a not-paid-off phone. The person you make monthly payments to is secondary to what your contract actually says when it comes to the legality of selling a not fully paid-off device.
Can You Legally Sell a Phone That Is Not Paid Off?
In short: It depends, but it’s not recommended and even may be considered illegal in some cases. The safest bet is to sell a financed phone and pay it off.
The Legal Gray Area of Selling Financed Phones
Contrary to popular belief, selling a financed phone before it’s paid in full is not automatically illegal. However, this is the legal gray area depending on a variety of factors:
- The terms of your financing contract
- What do you plan to do with the monthly payments after the phone is sold
- Disclosures to the buyer
What Your Financing Agreement Actually Says About Selling
Financing agreements for carriers and third-party providers usually contain specific language concerning who is the real owner of the device.
It will include things like:
- You don’t have actual ownership of both the device and the contract until it is fully paid in full
- You are obligated to continue service through the service provider for the duration of the monthly payments
- Transferring of ownership is prohibited until the full amount is paid
- Certain provisions if you breach the contract’s terms, which usually include the acceleration of the full amount due
If you’re thinking about selling your not-paid-off phone, review the specific agreement you signed with your network provider. Carefully read and take note of terms like transfer of ownership, sale of the device, and early termination.
Your Options for Selling a Phone That Is Not Paid Off
It is possible to sell a phone that is not paid off legally but what it’s also means that you have options in how you do it.
Pay Off the Remaining Balance First (Safest Option)
If you want to sell a not-paid-off phone easily and legally, the best thing to do is pay off the entire amount and only then sell the device.
To do this, follow these simple steps:
- Contact your carrier or third-party financing company
- Ask them for a payoff amount for the remaining balance
- Make the payment in a lump sum to the financing provider
- Request a confirmation in writing that the device has been paid off
- When you have the written confirmation of the full payoff, you can sell your current device at no restrictions from your carrier
This requires more money upfront but is also the simplest, with no legal implications. It will also likely result in a much higher selling price since the phone is no longer locked or tied to a specific carrier.
Sell and Continue Making Monthly Payments
Another way to sell a not-paid-off phone is to sell it but continue to make monthly payments on the plan.
The good thing about this approach:
- No big upfront payment
- Recoup some of the cost of the phone immediately
- The buyer gets a functioning phone
The truth:
It also has many potential risks associated with this practice, the most serious one is that you’re responsible for the payments and the buyer, by law, has very little you can do in case you stop making payments. Also, you’ll still be responsible for early termination fees and the remaining balance if you drop service. The phone could also be blacklisted with a bad IMEI status, leaving the buyer with an expensive paperweight.
Transfer the Financing Agreement When Switching Carriers
Some carriers will allow the financing agreement to be transferred along with the device. The obligation to make the monthly payments also transfers to the other party.
Requirements include:
- The party buying the phone is creditworthy and can get approved by the carrier.
- Both parties need to visit the carrier store in person.
- Some small administrative fees might be applicable
- The new owner has to take on service with the carrier
This is a legal way to sell your phone and still go about your business and works only if the other party can meet the above requirements and wants to take over both the device and the monthly payments. Note this only works on specific carriers.
Trade In Through Official Channels
The other way is to sell your current device through an official trade-in option from your carrier or Apple and use the trade-in value toward your next device.
This process usually entails:
- Trading in your current phone to the new one
- Trade-in value is applied to the purchase price of the new device
- Any balance not covered is rolled over into the financing of the new device
Technically not selling a phone but this is a good option to upgrade before you’ve made all payments on a current device and is accepted by almost all carriers.
Disclaimer: You can sell financed iPhones, but you are still responsible for the finance payments. The sale does not end your responsibility to continue your contract payments. Always check your carrier’s terms if you are not clear.
Potential Consequences of Selling a Phone That Is Not Paid Off
The legal penalty for trying to sell a not-paid-off device without making provisions for the remaining balance can have very serious consequences.
Financial Implications and Early Termination Fees
If you sell a financed phone and stop making payments on the device, you may expect:
- Being charged the full remaining balance on your account
- A bad mark on your credit record
- Account being sent to collections
- Early termination fees in addition to all other financial penalties if the device is still under contract
Device Blacklisting with Bad IMEI
The carriers can blacklist your device if there are any outstanding balances. This means:
- Device IMEI or electronic serial number will be flagged by a shared database
- The phone will no longer work on carrier networks
- The blacklist status will apply globally and not just with your carrier
- Device becomes worth little, if anything at all except for Wi-Fi use
Legal Repercussions
Selling a phone that is not paid off and not making any provisions for the outstanding balance may be construed as:
- Fraud in case the device’s status was misrepresented in some form
- Theft if it was shown that the financing agreement’s terms were violated
- Breach of contract at a minimum
All the above may result in civil and even criminal charges against you in an extreme case. Verizon takes all of these infractions very seriously.
Best Practices for Legally Selling a Phone That Is Not Paid Off
If you decide to sell a not-paid-off phone before it’s fully paid, here are the best practices to keep you on the right side of the law.
Always Disclose the Financing Status to Potential Buyers
Selling a financed phone legally and ethically includes always being 100% honest about your device’s status with your buyer.
The key things to disclose are:
- The device is still financed with remaining payments
- The carrier or company that is financing the device
- The exact amount still due on the remaining balance
- Your plans for how to deal with the remaining balance
- Potential implications for the buyer regarding the phone status
Giving a written statement (email, text or a signed sales receipt) helps create a paper trail of the disclosure that you can produce if it’s ever challenged.
Get Everything in Writing for a Smooth Transaction
Any time you buy or sell a valuable item, you should get everything in writing to protect yourself and the other party.
- Create a bill of sale specifically noting the device is financed
- Both parties should sign the bill of sale
- Include the device IMEI number on the bill of sale
- Specifically note who is responsible for future payments on the bill of sale
- Keep copies of all the communications related to the sale
Consider Escrow Services for Larger Transactions
In cases of more valuable devices like higher-end iPhones, you may want to consider a third-party escrow service.
- Buyer’s money is held by a third-party for a given period of time
- You continue to make payments for the same amount of time as specified
- If the device is in good standing with no negative reports on your account at the end of the agreed time, the funds are released to you
- This way, the buyer is at less risk of ending up with a blacklisted phone
Ethical Considerations When Selling a Financed Phone
When it comes to selling a financed phone that is not paid, off there are also some ethical issues to consider as well as the legal issues.
Transparency With Potential Buyers
Being transparent with potential buyers is good business and an ethical obligation as well as legally covering you in case of a dispute.
- Explain how the fact that the phone is still financed affects how it can be used
- Any other carrier locks or restrictions on the device are disclosed
- Be honest about why you are selling the phone in the first place
- Do not promise you can’t guarantee, such as continued payments
Respecting Contractual Obligations With Your Service Provider
Signing a financing agreement also means that you made some promises.
- Respecting those promises and not trying to circumvent them is also an ethical obligation to yourself and others
- After all, financing companies make their money on financing devices
- If many people feel it’s okay to circumvent their agreements, the terms will get much worse for everyone
Looking for an ethical way to sell your financed phone that is not paid off? BankMyCell works with only reputable buyback stores and all of them clearly outline their policies on not paid-off devices.
Alternative Solutions to Selling a Phone That Is Not Paid Off
Before you decide on selling a not-paid-off phone, think about alternative solutions if you are not in a big rush.
Carrier Early Upgrade Programs and Contract Buyout Deals
Early upgrade programs are offered by all major carriers. They work like this:
- Typically, after 50% of the device price is paid or twelve months of payments
- You turn in your current device in good condition
- Apply the trade-in value to a new device purchase
- Roll over any remaining balance to the new device’s financing
This is a good option if what you actually want is a newer iPhone. Verizon and T-Mobile have good phone upgrade programs.
Refinancing Your Device Through a New Carrier
There are also services that will allow you to refinance your monthly device payment.
They often provide lower monthly payments
You can get more flexibility as compared to carrier financing
Unlocks your phone from carrier-specific restrictions and locks
Usually requires good credit to qualify
Temporarily Suspend Service
If it’s financial hardship or unemployment that’s the problem, consider carrier hardship programs.
- Most carriers will allow you to temporarily suspend service
- While continuing your payment plan
- Allow you to breathe until your contract runs out
- A good option when you can’t sell your phone
Disclaimer: You can sell financed iPhones, but you are still responsible for the finance payments. The sale does not end your responsibility to continue your contract payments. Always check your carrier’s terms if you are not clear.
Helpful FAQ's
Can carriers track and blacklist a phone if I sell it while still being financed?
Yes, carriers can and do track financed devices. If you sell your device and do not continue making the payments, the phone can be blacklisted using the IMEI number. The blacklisting means that the device will not be able to connect to carrier networks worldwide, even if a new owner has purchased the device from you.
Will selling my financed phone impact my credit score?
Only if you do not continue making payments. If you sell the device but continue to pay for it as normal, you should see no effect on your credit score. However, any missed payments will likely be reported to credit bureaus.
Can I unlock my financed phone before selling it?
Normally, the carrier will not unlock a device that is still being financed. While exceptions can be made by some carriers when your account is in good standing, the usual requirement is that the phone must be paid off before it can be unlocked when selling a financed phone.
What's the difference between selling a financed phone and a phone on a contract?
A financed phone is when a specific loan is taken out to purchase the device, with payments only towards the device itself, while a phone on a contract is a service contract that also bundles the device payment into the monthly service cost. With financing, you’re financing the device only, while a contract phone has to pay off any remaining balance as well as possible early termination fees when selling a financed phone or a phone on a contract.
If I disclose to the buyer that the phone is financed, am I legally protected?
Disclosure can help protect you in a case of fraud, but even with the disclosure to the buyer, you still have to comply with your contract with the financing company. If the contract prohibits selling the device while it is still being paid off, disclosure to the buyer does not exempt you from your contractual obligations to the financing company.
Wrapping It Up
Selling a not-paid-off phone is more complicated than many people may think. Now that you know what you can and can’t do with a phone you are still paying off, you should be able to make an informed decision regarding what to do with your device.
By using the recommendations provided in this guide, you should be able to:
- Know the legal landscape with regard to devices that are still being paid off through financing
- Choose the option that makes the most sense for you based on your specific circumstances
- Take steps to protect yourself if you decide to sell your financed phone
- Consider alternative options that may also meet your needs if you are not in a hurry to sell your phone
The best course of action is to always pay off your device before selling. If that is not an option, then by being upfront with your buyer and getting everything in writing, you can also legally sell cell phones.
Your financial and legal well-being is worth the time and effort to properly sell a financed phone.
