Apple has officially announced Apple Upgrade, a new product leasing program available starting today in the United States. This marks a significant shift in Apple's approach to device financing, moving away from traditional installment loans to a lease structure that offers more flexibility for consumers. The program covers major product lines including iPhone, Apple Watch, Mac, and iPad, and is backed by Klarna, the global payments and shopping service known for its buy-now-pay-later solutions.
How Apple Upgrade Works
Apple Upgrade integrates directly into the checkout flow on Apple's website, alongside existing purchasing options like one-time payment and Apple Card monthly installments. When configuring a new device, customers can select the lease option, which then triggers a soft credit check managed by Klarna that does not affect the user's credit score. Once approved, the customer enters a lease agreement with terms that vary by product category.
For iPhone and Apple Watch, lease terms are available in 12-month or 24-month durations. Mac and iPad offer longer terms of 24 months or 36 months. This tiered structure allows customers to match their payment horizon with the typical lifespan of the device. For example, a top-of-the-line iPhone 17 Pro 256GB (priced at $1,099) can be leased for $31.99 per month over 24 months or $45.99 per month over 12 months. The lowest entry point is the Apple Watch Series 11 GPS, 42mm, which starts at $11.99 per month for 24 months or $21.99 for 12 months.
Smartphones and smartwatches typically see more frequent upgrades compared to laptops and tablets, which is why shorter terms are available for iPhone and Apple Watch. Mac and iPad, products that users tend to keep for three to five years, are offered with 24- and 36-month plans. MacBook Air leases start at $24.99 per month for 24 months (the base configuration), while iPad mini leases begin at $15.99 per month for 24 months. Higher-end configurations naturally cost more; the iPad Pro 256GB is $24.99 per month for 36 months or $31.99 for 24 months, and the MacBook Pro (16GB RAM, 1TB storage) is $38.99 for 36 months or $53.99 for 24 months.
End-of-Lease Options and Flexibility
At the end of the lease term, customers have three choices: upgrade to a new device, purchase the current device outright, or return the device and exit the program entirely. If they choose to buy the device outright, they pay the difference between the total lease payments already made and the full retail price of the product. This gives users a transparent path to ownership without surprise fees.
Importantly, these options are available from day one of the lease. Customers can upgrade early or exit the program early by paying the remaining balance of the lease payments. There are no additional fees, penalties, or interest charges associated with early termination—only the outstanding payments. The same applies if a customer simply decides to stop using the program: returning the device ends their obligation entirely, provided they have made all required payments up to that point.
Trade-In and Payment Integration
Apple Upgrade supports trade-in of existing devices during the checkout process, which can lower the monthly lease payments over the initial term. This trade-in option includes not only Apple devices but also Android smartphones, broadening accessibility. Customers can also link their Apple Card to earn 3% Daily Cash on lease payments, providing an incentive for cardholders to choose this method. The first payment is due approximately 30 days after the device is shipped or available for pickup.
For iPhone leases, the device must be activated on one of the three major U.S. carriers—AT&T, T-Mobile, or Verizon—and prepaid plans are not eligible. However, the iPhone itself is sold unlocked, allowing customers to switch carriers at any time during the lease term. This requirement likely stems from carrier subsidy arrangements and ensures that the device is connected to a qualifying network from the start.
Program Management and Late Payments
All payment management, including viewing due dates, updating payment information, and tracking lease status, is handled through the Klarna app. This offloads administrative overhead from Apple and leverages Klarna's existing infrastructure for credit assessment and payment processing. Apple Upgrade does not include AppleCare+ by default, but customers can add it at an extra monthly cost. The device can also be added to an existing AppleCare One bundle if the user already subscribes.
In terms of late payments, the program offers leniency: a missed payment is simply rolled into the next month's bill, and no late fees are incurred. However, if three consecutive payments are missed, the lease agreement ends and the customer must pay the full outstanding balance immediately. If the customer takes no action at the end of the lease term, the lease automatically converts to a month-to-month arrangement for up to six months, during which payments may increase. At the end of that six-month period, the customer is charged the full purchase price of the device. Notably, the customer never owns the device unless they explicitly choose to buy it by paying the remaining balance.
Excluded Devices and Discontinuation of Previous Programs
Not all Apple products are available through Apple Upgrade. Excluded devices include the iPhone 16 and iPhone 16 Plus (likely because they are older models), the Apple Watch SE, the MacBook Neo, the Mac mini, the iPad (A16), and the Studio Display. These exclusions suggest that Apple is positioning Apple Upgrade as a premium leasing offering focused on flagship and pro-tier devices, rather than entry-level or older products.
As part of the launch, Apple is discontinuing its existing iPhone Upgrade Program and iPhone Payments financing options. Customers currently enrolled in the iPhone Upgrade Program can remain in their agreements until they are ready to upgrade, at which point they will transition into one of the new Apple Upgrade plans or choose an alternative purchase method. This retirement of the old program simplifies Apple's financing lineup, consolidating everything under one branded offering.
Background and Industry Context
Apple's move into leasing reflects broader trends in consumer electronics and automotive industries, where subscription and lease models are supplanting traditional ownership. For decades, Apple offered installment loans through carrier partners and, more recently, its own iPhone Upgrade Program (launched in 2015) that gave customers annual upgrades with interest-free payments. That program required a carrier activation and was limited to iPhones. The new Apple Upgrade program expands eligibility to Mac, iPad, and Apple Watch, and introduces terms that rival traditional leasing industry standards.
The partnership with Klarna is significant. Klarna has become a dominant player in the buy-now-pay-later space, and its integration with Apple signals a deeper collaboration. For users who prefer not to use credit cards or who want predictable monthly expenses without interest, this leasing model offers an alternative. Unlike the Apple Card monthly installments, which require an Apple Card and involve interest-free financing but eventual full ownership, leasing does not build equity; the device must be returned or purchased at the end. This distinction is important for consumers to understand.
Apple Upgrade is available starting today in the United States through Apple's website, the Apple Store app, and in Apple retail stores. The company has not announced plans to expand the program internationally, but given Apple's global reach and Klarna's presence in multiple countries, a rollout to other markets may follow. For now, U.S. customers can explore the program on Apple's online store and see tailored pricing for their chosen configurations.
With Apple Upgrade, the company is positioning itself to compete not only with carrier upgrade programs but also with third-party subscription services for electronics. The absence of interest and late fees, combined with flexible exit options, could attract users who value low commitment and the ability to always have the latest hardware. However, consumers should carefully consider the total cost over multiple upgrade cycles compared to buying outright or using interest-free installment plans.
Source: 9to5Mac News