What's Behind Apple's Push to Lease iPhones and Macs?

Starting at $17.99 per month, Apple customers in the U.S. can now lease an iPhone directly through the tech giant rather than buying it outright. The sweeping initiative, dubbed Apple Upgrade, transforms how consumers access Apple's flagship ecosystem—expanding hardware leases to Macs, iPads, and Apple Watches through a partnership with financial provider Klarna. The debut comes at a pivotal moment, as supply chain pressures force traditional device prices higher while consumer upgrade cycles continue to stretch.

What Is Happening

Apple has officially launched Apple Upgrade across its U.S. physical retail locations, online storefront, and the Apple Store app. Underwritten by Klarna, the program allows qualified applicants who pass a soft credit check to lease consumer hardware for fixed monthly payments with zero interest. Leasing tiers span 12 or 24 months for iPhones and Apple Watches, and 24 or 36 months for Macs and iPads.

Monthly entry prices vary depending on the product line:

• iPhone: Starts at $17.99 per month.
• Apple Watch: Starts at $11.99 per month.
• iPad: Starts at $11.99 per month.
• Mac: Starts at $24.99 per month.

Entry-level models—such as the iPhone 16, MacBook Neo, base iPad, and Apple Watch SE—are excluded from the program. Concurrent with this launch, Apple has discontinued its long-running iPhone Upgrade Program for new U.S. enrollees.

The Background

For years, U.S. consumers primarily financed smartphones through wireless carrier installment plans or credit lines. Apple previously offered its own iPhone Upgrade Program starting at roughly $42 per month, which bundled AppleCare+ protection into 24-month installments with an option to trade in after 12 payments.

However, consumer habits have shifted dramatically. Research from Bernstein indicates that the average iPhone replacement cycle has extended to nearly four years, while survey data from Reviews.org places the average owner retention time at 22 months. Furthermore, recent component cost increases have created upward pressure on retail sticker prices. Following a global memory shortage driven by data center demand, Apple increased starting prices on select Mac and iPad models by at least $100 in June, with some higher-tier configurations jumping by more than $1,000.

The Latest Development

By restructuring hardware access into a pure leasing model, Apple shifts customer focus away from hefty up-front sticker prices toward predictable monthly subscriptions. According to component teardown estimates from TechInsights, elevated memory and manufacturing costs could add as much as $300 to an iPhone's bill of materials, leading analysts to anticipate potential retail price increases for upcoming hardware releases.

The new program competes directly with traditional carrier financing offered by AT&T, Verizon, and T-Mobile. Unlike installment plans where payments eventually lead to full ownership, Apple Upgrade operates strictly as a lease. At the conclusion of the term, customers must return the hardware in good working condition, pay a fee to purchase the device outright, or roll their agreement into a new lease for an updated model.

What It Means

For shoppers in the U.S., Apple Upgrade provides a lower monthly entry point to acquire premium hardware like the iPhone 17 Pro ($31.99/month for 24 months) or a 14-inch MacBook Pro ($38.99/month for 36 months). Current trade-ins can be applied directly to reduce monthly payments further.

However, because the agreement is structured through Klarna rather than a standard retail loan, users face strict contractual terms:

• No security deposit is required upfront.
• AppleCare+ is not automatically bundled, meaning users must purchase insurance separately or face potential damage fees upon returning unmaintained hardware.
• Early termination or early upgrades before the minimum term limit incur substantial additional fees.
• If a customer misses three consecutive monthly payments, Klarna will terminate the lease and demand payment of the full outstanding balance.

Responding to concerns regarding early operating system beta code that pointed to remote device locks, Apple confirmed that users who miss payments will not see their devices placed into a limited functionality mode.

There will be no restricted mode and/or there will be no limitations put on device functionality due to missed payments or default with the Apple Upgrade program.

What Remains Unclear

While the terms for new enrollees are explicit, details regarding the long-term transition for existing members of the former iPhone Upgrade Program have not been detailed. Additionally, specific buyout fee structures at the conclusion of 12-, 24-, or 36-month terms vary by device tier and full residual value calculations at lease expiration.

Frequently Asked Questions

How much does it cost to lease an iPhone under Apple Upgrade?

Leasing prices for iPhones start at $17.99 per month for base models, while premium devices like the iPhone 17 Pro cost $31.99 per month on a 24-month lease or $45.99 per month on a 12-month lease.

Is AppleCare+ included with Apple Upgrade?

No. Unlike the former iPhone Upgrade Program, AppleCare+ is not bundled into the monthly cost and must be purchased separately to cover device damage or theft.

Do I own the device at the end of the lease?

No. Because it is a consumer lease, you must either return the device in good working condition, upgrade to a new model by starting a new lease, or pay an additional purchase fee to keep it.

What happens if I miss a monthly payment to Klarna?

Klarna does not charge late fees, but missing three consecutive monthly payments will result in lease termination, requiring you to pay the entire remaining balance immediately. Your device will not be placed into a restricted operational mode by Apple.

Which devices are eligible for the leasing program?

Eligible devices include recent iPhone models (such as the iPhone 17 lineup and iPhone Air), Apple Watch Series 11 and Ultra 3, MacBook Air, MacBook Pro, iMac, Mac Studio, and select iPad Air, Pro, and mini models. Budget devices like the iPhone 16 and MacBook Neo are excluded.