Explain to me the 2 year contract with apple when purchasing an iPhone?

I want to buy an iPhone 5 but it requires that I concur to their two year contract.

Did you not want a contract? If not, then your only options is to go to Walmart and buy their Straight Talk prepaid iPhone 5 OR go to the Apple store either online or in person and buy a factory unlocked iPhone 5 for full price (which ranges from $649 to $849) and buy a nano SIM card to use prepaid.

No, it doesn't. It never does. You can buy the phone for it's full $650 price, or the $200 subsidized pricing. Only when you go for the subsidized price, do you have to have to sign a contract. It's like that with virtually any phone. It just means that you have to stay with that service provider for 2 years (or 20 months on AT&T and Sprint) unless you want to pay up some hefty fees to close your line. You've done it most likely all phones you've bought from a carrier. It's not anything scary or dangerous, don't worry.

If you don't want to be stuck on the same carrier for 2 years, though, you can buy it unlocked from Apple.com, from someone you know who is selling one, or from eBay. You WILL have to pay a large price, but with eBay or a person, you might not end up paying the full $650. Maybe around $600-$630. I'd buy it from Apple.com for the warranty if you go this route, though.

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