Apple Expands Device Lease Program with Klarna

Apple has expanded its Upgrade Program to offer 24- and 36-month leasing terms for a range of devices, including iPhones, iPads, Macs, and Apple Watches, through a partnership with financial technology company Klarna [1]. This shift aims to cater to "serial upgraders" by providing lower monthly payments compared to financing, though it does not reduce the overall cost of ownership [1].

Program Details and Device Availability

The Apple Upgrade Program allows consumers to lease qualifying devices for a monthly fee that is lower than traditional financing options [1]. For example, an iPhone 17 Pro, which starts at $1,100, costs $32 per month on a 24-month lease, compared to approximately $46 per month for 0% interest financing over the same period with an Apple Card [1]. At the end of the lease term, users can return the device in good condition to upgrade to a new one, or pay an additional fee to keep it, which will not exceed the original full price minus payments made [1]. Unlike the previous iPhone Upgrade Program, which allowed upgrades after 12 months, the new terms are fixed at 24 or 36 months [1].

The program, managed by Klarna, a "buy now, pay later" (BNPL) provider, does not incur extra interest on the lease payments [1]. However, it does not include AppleCare, making the consumer responsible for any damage, loss, or theft, with fees incurred for damaged devices upon return [1]. Devices currently available through the program include the iPhone 17 lineup, Apple Watch Series 11 and Ultra 3, MacBook Air with M5, M5 Pro, and M5 Max chips, iMac with M4, Mac Studio with M3 Ultra and M4 Max, iPad Air with M4, iPad Pro with M5, and iPad Mini with A17 Pro [1]. Notably, the Apple Vision Pro, AirPods, Apple TV 4K, HomePod, and accessories are not available for lease [1].

Financial Implications for Consumers

While the program offers lower monthly payments, it is designed for frequent upgraders rather than those seeking to save money or own their devices [1]. Over a 24-month lease for an iPhone 17 Pro, a user would pay about 70% of the phone's cost, saving approximately $332 compared to an outright purchase, but would not own the device at the end of the term without an additional payment [1]. In contrast, 0% interest financing through an Apple Card would result in ownership of the device after two years, allowing for resale or trade-in [1]. The program does not offer better long-term value or lower the cost of ownership, as it forfeits potential resale or trade-in benefits [1]. Consumers looking to save money or upgrade annually are advised against using the program [1].

What to watch

• Monitor the adoption rate of the Apple Upgrade Program as consumers weigh the benefits of lower monthly payments against the lack of ownership and potential end-of-lease fees [1].
• Observe how the partnership with Klarna impacts Apple's sales strategy and its competitive position against carriers and other financing options [1].
• Watch for any future expansions or changes to the list of eligible devices, particularly regarding higher-end products like the Apple Vision Pro [1].

The expanded Apple Upgrade Program reflects a strategic move by Apple to offer greater payment flexibility and encourage regular device upgrades, aligning with a broader market trend towards subscription-like access to technology rather than outright ownership [1].