Changing your smartphone for a brand new device doesn’t come cheap, especially if you don’t want to be locked into two-year contracts with a network provider.

But in recent years, phone owners have cottoned onto a secret that most of the big-name smartphone manufacturers would rather have not let out of the bag – that a fully refurbished second-hand handset often matches a brand new device pound-for-pound in terms of performance, and at a fraction of the price.

The refurbished phone market has boomed in recent years while new device sales have plateaued. There are several reasons for this trend, but the one that drives them all is consumer sentiment – phone owners in their tens of thousands have realised you can get a better deal with a refurbished handset, without sacrificing anything on quality.

So how exactly do refurbished phones deliver better value than new? Here are three key reasons.

Smartphones lose their value insanely quickly

It might sound ridiculous, but much of the value of a brand new smartphone comes from the fact that they are… well, brand new. Not the specs or the performance, but simply because they are new. We know this because smartphones depreciate in value at an astonishing rate – from in the region of 40% in the first 12 months after purchase for Apple iPhones, up to close to 75% for Google and Huawei models.

Does a Google Pixel phone perform 75% less effectively once it is merely a year old? Not by a long shot. But this sharp decline in value is a hangover from the way manufacturers have been able to dictate pricing around release cycles, commanding sky-high prices on the back of the hype generated around each new product launch.

This model survives because a lot of people are happy to pay top whack for a brand new handset. But for everyone else, there are bargains to be had. If you want to buy a top-end device without paying for the latest releases, just wait until Apple, Samsung and the rest launch their next upgrade. You’ll see plenty of last year’s models available when people trade them in, even if they are just 12 months old.

Refurbished phones are better than ‘nearly new’

As we mention above, a 12-month old smartphone works just as well as a brand new device. But what about a two year old handset, three years old, four? What about the bumps and scrapes second-hand devices get along the way, batteries deteriorating, bugs and software glitches?

When you buy a refurbished smartphone, you don’t have to worry about that. You’re not buying a second-hand phone straight from its last owner – you’re buying a pre-owned device that has been restored to its original condition. That means cosmetic fixes to the case and screen, a new battery, system factory resets, debugging, the lot, all fully tested and graded for validation.

All the perks, none of the tie in

These days, more and more phone owners are opting for pay-as-you-go or SIM-only contracts for one simple reason – contracts that include a new handset end up wasting you money. Studies have shown that millions of phone owners tied into these 24-month contracts pay off the value of their device long before the end of their deal – but have to keep paying nonetheless.

When you look at it this way, spreading the costs for a new smartphone by paying monthly becomes a false economy – you’re paying more than an already expensive device is worth. With a refurbished phone, you know exactly what you are paying for – a great device at a discounted price, paid for up front, with no hidden charges or tie ins.

You also get benefits with other ongoing costs like insurance. Because you pay less for a refurbished phone to start with, insurance is cheaper. Many refurbished phone vendors these days will also offer perks like warranties, so you can rest assured about the performance of your device and get free repairs and replacements within a fixed period.