Apple is introducing a new leasing program for its devices in the U.S., a strategic move aimed at making its premium products more accessible and potentially boosting sales amid rising component costs and a tougher economic climate. The program, dubbed “Apple Upgrade,” allows customers to lease iPhones for up to two years, with monthly payments starting as low as $17.99. This initiative, a collaboration with buy-now-pay-later giant Klarna, will be available through Apple’s physical and online retail channels and extends to Apple Watches, Macs, and iPads with varying lease terms.
This announcement comes at a critical juncture for Apple. The company recently implemented notable price increases for its iPads and Macs, citing supply chain pressures and a global memory crunch. Analysts widely anticipate similar price hikes for the upcoming iPhone lineup, making accessible leasing options a crucial strategy to mitigate the impact of higher upfront costs on consumer purchasing decisions.
“A significant portion of Apple’s customer base, particularly in developed markets like the U.S., already utilizes installment plans or trade-in programs for their device purchases. Therefore, we can expect Apple to roll out increasingly aggressive offers in this space,” noted Nabila Popal, senior research director at IDC. This sentiment is echoed by industry observers who believe that installment payment strategies can help smooth out seasonal sales fluctuations and reduce Apple’s dependence on the success of individual product launches for sustained growth. Furthermore, the new leasing model could incentivize customers to upgrade their devices more frequently, potentially shortening the current average iPhone replacement cycle, which Bernstein estimates has extended to nearly four years.
Under the terms of the Apple Upgrade program, devices leased for 24 months must be returned at the end of the term. Customers will have the option to purchase their leased device outright with an additional payment or to upgrade to a new model. The program requires no security deposit, and while Klarna will not impose late fees, leases will be terminated following three months of missed payments. Apple has also officially discontinued its previous iPhone Upgrade Program in the U.S., migrating existing customers to the new Apple Upgrade framework.
Pricing for the new leases will vary based on the device model. For instance, an unlocked iPhone 17 Pro will cost $31.99 per month for a two-year lease or $45.99 per month for a one-year lease. Notably, some entry-level devices, such as the iPhone 16 and MacBook Neo, are not included in this new leasing program.
The push for more accessible payment options is underscored by ongoing industry speculation regarding iPhone price increases. Morgan Stanley analysts project that Apple may need to raise the price of the iPhone 18 Pro by approximately $200 to maintain its profit margins. Component-level analyses by TechInsights suggest that increased costs for memory and other components could add up to $300 to the bill of materials for an iPhone.
Adding to this evolving product landscape, Apple is reportedly exploring further premium offerings. Industry chatter suggests the potential debut of a foldable iPhone alongside the iPhone 18 Pro lineup this September, with projected retail prices reaching around $2,500.
For consumers, the new Klarna-powered leasing alternative presents a more cost-effective option compared to the previous iPhone Upgrade Program, which involved AppleCare+ and financing through Citizens Bank, resulting in monthly payments exceeding $42 for a 24-month term.
This strategic shift places Apple in more direct competition with major wireless carriers such as AT&T, Verizon, and T-Mobile, all of whom have historically leveraged device financing and trade-in subsidies to attract and retain customers. Beyond this new leasing program, Apple already offers interest-free financing through its Apple Card Monthly Installments and provides short-term loan options via Klarna and Affirm for Apple Pay users.
The introduction of this leasing program comes just as Apple is preparing to announce its third-quarter earnings. This report will be the final earnings call overseen by CEO Tim Cook before his transition to Executive Chairman of the Board. The company’s performance, particularly in light of these new pricing and financing strategies, will be closely scrutinized by investors and industry analysts alike.
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