Apple has officially introduced “Apple Upgrade,” a new leasing program that aims to make it easier to get your hands on the latest iPhone, Mac, iPad, and Apple Watch models. The service is launching today in the US, and works like a car lease — allowing users to keep a device at the end of their subscription period, pay off the device early, or upgrade early to a new model.
This leasing program is rolling out just weeks after Apple hiked the prices of its MacBooks, iPads, and other devices in response to the ongoing memory and storage shortages. While iPhones were spared, current Apple CEO Tim Cook warned last month that “the situation has become unsustainable,” meaning the iPhone 18 series could be pricier than expected when it launches later this year.
The new Apple Upgrade program will be available both online and in physical retail stores, with Klarna serving as Apple’s financial backer. Users will need to be approved for the program via a soft credit check. 24 month-leases are available for iPhones and Apple Watches under the new program, while Mac and iPad plans will run for 36 months.
Leasing prices start as low as $17.99 per month for the iPhone 17e, $11.99 for Apple Watch series 11, $24.99 for the MacBook Air, and $11.99 for the iPad Air. At the end of their lease term, customers can upgrade their device to the latest generation, purchase it with a one-time payment, or return it and exit the program.
Apple Upgrade is replacing the existing, more limited iPhone Upgrade Program that first launched back in 2015, and is no longer accepting new enrollments. Beside the new program covering a wider range of devices, another notable difference is that Apple Upgrade doesn’t include AppleCare, the warranty extension plan that was also recently impacted by price hikes.
The new leasing service is a continuation of the goals Apple had for the iPhone Upgrade Program: to provide an in-house alternative to the upgrade plans offered by many US carriers. Just remember to keep up with your payments — some code discovered in the iOS 27 beta last week suggests that Apple is working on a way to lock financed iPhones out of apps if it detects you’re in arrears.
Background and Context of Apple’s Financing Strategies
Apple has long offered financing options to make its premium devices more accessible. The original iPhone Upgrade Program, launched in 2015, allowed customers to pay for a new iPhone in 24 monthly installments and upgrade to the latest model every year. That program included AppleCare+ and was managed through a partnership with Citizens Bank. However, as Apple expanded its product lineup and faced increasing component costs, the company began exploring more flexible leasing options.
In 2023, Apple introduced its own buy-now-pay-later service called Apple Pay Later, though it was later discontinued as the company shifted focus to third-party partners like Klarna. The new Apple Upgrade program represents a more comprehensive approach, covering not just phones but also tablets, laptops, and smartwatches.
The timing of the launch is significant. Just weeks before, Apple raised prices on its MacBook Pro and iPad Pro models by up to $200 in some regions, citing a global shortage of memory chips and NAND flash storage. Tim Cook, in a conference call with analysts, described the situation as “unsustainable” and hinted that future iPhone releases might also see price bumps. The leasing program is seen as a way to soften the blow for consumers who might otherwise be priced out of the Apple ecosystem.
How Apple Upgrade Compares to Carrier Plans and Older Programs
Major US carriers like Verizon, AT&T, and T-Mobile have long offered device installment plans, often with trade-in deals that effectively provide free upgrades for loyal customers. Apple’s own program aims to be simpler and more transparent. Unlike carrier plans, Apple Upgrade does not require a multi-year service contract, and customers can switch carriers freely. However, the absence of AppleCare+ coverage is a notable drawback, especially for users who want comprehensive protection against accidental damage.
Under the old iPhone Upgrade Program, AppleCare+ was bundled into the monthly payment. With the new leasing model, customers must purchase AppleCare+ separately if they want it. Given that Apple recently increased the price of AppleCare+ for many devices, this could make the total cost of ownership higher for those who opt for the warranty.
Another key difference is the lease duration. For iPhones and Apple Watches, the lease is 24 months, which aligns with the typical upgrade cycle for smartphones. For Macs and iPads, the lease term is 36 months, reflecting the longer lifespan of these devices. At the end of the lease, users have three options: upgrade to the latest model (starting a new lease), pay a residual fee to own the device outright, or return it and walk away. This flexibility is similar to car leasing and contrasts with carrier installment plans that usually require full payment over 24 or 30 months.
Financial Implications and Partnerships
Klarna, the Swedish fintech company, is the financial partner for Apple Upgrade. Klarna has been expanding its US presence and already powers many buy-now-pay-later options for retailers. For Apple, partnering with Klarna means offloading the credit risk while still offering a seamless checkout experience. Users must undergo a soft credit check, which does not affect their credit score, to be approved.
The minimum monthly payments are designed to be competitive. For example, the iPhone 17e at $17.99 per month over 24 months totals $431.76, but the full retail price of that device is around $599, meaning the lease effectively charges a lower monthly fee because the customer does not own the device at the end unless they pay the residual. The residual value is not disclosed, but based on typical leasing models, it might be around 30% of the original price.
Apple’s move into device leasing also comes as the company seeks to increase services revenue. Although the hardware is still the core business, recurring payments from leases create a predictable revenue stream and lock customers into the Apple ecosystem. Additionally, leased devices that are returned can be refurbished and resold, generating further profit.
Potential Risks and Consumer Considerations
While the program offers flexibility, there are risks. The discovery of code in the iOS 27 beta suggesting that Apple could lock out financed iPhones from apps if payments are missed raises privacy and security concerns. Critics argue that such a feature could be used to exert undue pressure on customers, especially if a missed payment results in loss of access to vital apps like banking or navigation. Apple has not confirmed whether this feature will be implemented, but it is reminiscent of the company’s past attempts to prevent iPhone theft by locking activation.
Another consideration is the total cost over time. Leasing always tends to be more expensive than buying outright if you plan to keep the device for multiple years. For example, a MacBook Air with a monthly lease of $24.99 over 36 months comes to $899.64, while the retail price might be $999. In this case, the lease is cheaper only if you intend to upgrade after three years. If you keep the MacBook for five years, buying it outright would be more economical.
Consumers should also be aware that the lease program is separate from Apple’s trade-in program. If you trade in a device while leasing, you may be subject to early termination fees. Apple has not detailed these fees, but typical lease contracts include penalties for early exit.
In summary, Apple Upgrade represents a significant shift in how the company sells its hardware. By offering leases on a broad range of devices, Apple is responding to rising prices and changing consumer preferences for subscription-based ownership. As with any financial product, careful reading of the terms and comparison with other options is recommended.
Source: The Verge News