Apple Upgrade Trades Ownership for Lower Monthly Payments

Apple has revealed its new hardware leasing program called Apple Upgrade, which is being offered in collaboration with Klarna. This is Apple’s pitch:

Introducing Apple Upgrade, a new way to always have the Apple products you love. Lease a new iPhone, iPad, Mac, or Apple Watch with pocket-friendly payments and terms that work for you. Then easily upgrade to something new at the end of your lease, and return your current device. It’s that simple.

That pitch comes with a footnote that includes other details worth considering:

The program is U.S. only (excluding U.S. territories).

You need to be a U.S. resident who is at least 18 years old, or whatever the legal age is where you live.

There are eligibility and credit approval requirements and you must have a credit or debit card and an Apple ID.

When a device is returned, it must be in good condition or damage fees will be assessed.

Upgrades require a new lease subject to whatever eligibility and credit requirements apply at that time.

For iPhones, you have to have a carrier and can’t use a prepaid plan.

The program isn’t available for refurbished devices or through the Apple Employee Purchase Plan, corporate Employee Purchase Plans, Apple at Work, Government, Education, or Veterans and Military Purchase Programs.

Okay, so maybe it’s not “that simple” after all.

The program is available for the iPhone, iPad, Mac, and Apple Watch product lines. For the iPhone, monthly payments start at $17.99 for an iPhone 17e and start at $34.99 for an iPhone 17 Pro Max, for leasing periods of either 12 months or 24 months.

For iPads, the starting prices range from $12.99/month to $24.99/month, Macs range from starting prices of $24.99/month to $48.99/month, and the Apple Watch ranges from starting prices of $11.99/month to $47.03/month. But again, these are just starting prices. You can configure a fully loaded 16-inch MacBook Pro that is just under $230/month, and it won’t include AppleCare.

As a point of comparison, under the current program that is being discontinued, I pay $69.50/month for an iPhone 17 Pro Max, but I have a 512GB model, so my lease price for the same phone would be $40.83/month, significantly lower, but keep in mind that doesn’t include AppleCare+, which would add $13.99/month or $139/year for that iPhone. On a monthly basis, that puts a new iPhone 17 Pro Max with 512GB of storage and AppleCare+ at just under $55/month. Still a superior deal, but not nearly as good as the landing page might initially lead you to believe.

At the end of your lease you’ll have six months to decide to return the leased device, during which you’ll continue to make monthly payments, or pay a fee equal to the difference between the original purchase price and your lease payments to buy it outright. Your other option is to enter into a lease for a new device. If you return your leased device in poor condition, Klarna will charge you a damage fee. You can also terminate your lease early if you pay the remaining lease payments in full plus any taxes and fees.

If you lease accessories for your device, those don’t have to be returned. Why? Presumably because they have no value to Apple or Klarna.

Of course, if you have a device to trade in, that monthly figure could be significantly reduced. If I had the iPhone 16 Pro Max I had last year to trade in and leased a 17 Pro Max for 12 months, my monthly payments would be under $1. However, keep in mind that once you’re on the leasing train, you no longer own your iPhone, so future upgrades won’t reduce your payments the next time you swap your device for a new model. If you don’t own it, the value isn’t yours to trade in.

If you’re on the existing iPhone Upgrade Program like me, it’s being discontinued, but Apple has a transition offer for you. The old program spread payments over 24 months with the option to turn in an iPhone for a new one after 12 months. That’s not changing. If you’re paid in full on your first 12 months of an iPhone, you can sign up for the new program, get a new iPhone, and return your old iPhone to Apple, which will close your old account but won’t reduce your lease payments. You’re not obligated to join the new leasing program, though. You can also trade in your old iPhone, ending your finance contract, and buy a new full price iPhone.

As you may have figured out by now, I’m not a fan of this program, though I expect it will be successful.

Apple products, like all consumer electronics, are getting more expensive every day. The monthly payments on a leased device look very attractive compared to the pay-up-front price. For years, car leases have induced people into monthly payments that can become a burden when their financial situation changes. Now the same will be true of iPhones, iPads, Macs, and Apple Watches.

Maybe as a practical matter this program isn’t that different from the old financing program, but at least there, you owned your device at the end and could just keep using it indefinitely. With the new program, that’s not an option. When your lease is over, you’re empty-handed and faced with leasing again, buying out the lease, or buying at full price with no trade-in, which is objectively worse.

Ultimately, Apple isn’t responsible for customers’ bad financial decisions, but this program feels like Apple is putting its customers in harm’s way.