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New Leasing Option for Tech Gear May Help Combat Higher Costs
Apple Upgrade program carries risks but could be copied by Android rivals
Apple Upgrade is an effort to make products more affordable amid soaring component prices driven by artificial intelligence.
Kevin Carter/Getty Images
Key takeaways
- New program lets consumers lease eligible iPhones, iPads, Apple Watches, and Macs with zero-interest monthly payments.
- Lease terms range from 12 to 36 months, and consumers can return, upgrade or buy the device when the lease ends.
- Early-termination fees, carrier requirements and potential costs for lost or damaged devices are among the key risks.
On July 28, Apple launched an interest-free leasing program called Apple Upgrade that, instead of conventional financing, might help numb the pain of higher prices for people interested in new iPhones, iPads, Macs and Apple Watches. The new program will replace the iPhone Upgrade Program. Existing customers will have multiple options once they are eligible for a new device.
The idea is that leasing will make them more affordable. Under Apple Upgrade, consumers can choose a 12- or 24-month lease term for iPhones and Apple Watches and a 24- or 36-month lease term for iPads and Macs.
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Apple is partnering with a “buy now, pay later” company called Klarna.
Payments for an iPhone 17e start at $17.99 for 24 months; a top-of-the-line 17 Pro Max starts at $34.99 for the same length.
Apple Watch lease prices start at $11.99 for 24 months; an iPad mini fetches $11.99 for 36 months. Mac prices are from $24.99 per month for 36 months.
You can lower the monthly tab further if you have a product to trade in.
Weeks ago, Apple announced price hikes on many of its devices, which rivals such as Google, Microsoft and Samsung have had to grapple with.
The tech goliaths want to pass along the soaring costs of memory and storage chips to consumers rather than absorbing them themselves. Such chips are in short supply because of the explosion of artificial intelligence.
Apple has held off on raising iPhone prices so far, but that’s unlikely to continue in September, when new models are expected to launch.
If you are currently enrolled in Apple’s prior upgrade plan for iPhone, which dates back to 2015 and will be discontinued, you must continue to make payments until you meet your financial obligations.
Choices when the leases expire
At the end of the new Apple lease, consumers can return the product, buy it outright with an additional one-time payment or upgrade to a new device.
Terms are subject to a “soft credit check,” which includes providing your date of birth and Social Security number.
The risks of leasing
Leasing, of course, means you are effectively renting a product rather than owning it, which not every consumer will be comfortable with. It is your responsibility to keep a leased device in good working order.
Early termination will incur a “substantial” fee, Apple says, which is equal to the total of your unpaid monthly lease payments, including taxes.
What’s more, consumers may want to consider extra warranty coverage through Apple’s AppleCare program, since you may be on the hook if the phone is damaged, lost or stolen.
To lease an iPhone, you must select AT&T, T-Mobile or Verizon as your carrier and cannot choose a “prepaid” wireless plan.
However, since a leased iPhone is always “unlocked,” you can switch wireless companies, subject to the carrier’s own terms.
Apple says you can lease multiple devices under the new program, but you must apply for each product separately.
“This is a great deal for older consumers who expect to regularly upgrade their devices, rather than buy and use them until they die — although even then, they could simply buy the device at the end of the lease and be no worse off,” says Avi Greengart, a tech analyst with Techsponential in New Jersey. “The key is that Apple is willing to pay Klarna to administer a zero-interest lease program in order to generate steady demand for new device sales, despite higher prices.”
Klarna will handle lease payments; Apple will handle costs associated with AppleCare.
What about Android?
Consumers can lease Android phones through third-party companies and phone carriers, but Android manufacturers have mostly stuck to traditional financing methods.
A “lease-to-own” company such as SmartPay lets you lease a new phone every 11 months through participating retailers. Other lease-to-own companies include Flexshopper from Snap Finance and Katapult.
Unlike Apple, there is no uniformity on the Android side.
Still, it would not be surprising if rivals take a cue from Apple.
“Carriers effectively already offer zero-interest financing and lease-like upgrade programs,” Greengart says. “I do expect this to be copied by other manufacturers, including PC and tablet makers. The challenge will be to match Apple’s consumer-friendly terms within the lease program.
The key takeaways were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.
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