Apple has introduced a new leasing program that allows customers to rent iPhones, Apple Watches, Macs, and iPads instead of purchasing them outright. This initiative replaces the previous iPhone Upgrade Program and is facilitated through a partnership with payment platform Klarna.

How the Leasing Program Works

  • Monthly payments start at $17.99 for iPhones, $11.99 for Apple Watches, $24.99 for Macs, and $11.99 for iPads.
  • Lease terms vary: 12 or 24 months for iPhones and Watches; 24 or 36 months for Macs and iPads.
  • Eligible devices include the iPhone 17 series, iPhone Air, Apple Watch Series 11 and Ultra 3, MacBook Air, MacBook Pro, iMac, Mac Studio, and iPad Air, Pro, and Mini models.
  • Lower-tier devices like the iPhone 16, MacBook Neo, base iPad, and Apple Watch SE are excluded.
  • At lease end, users may upgrade to a newer model, buy the device outright with a single payment, or return it without further obligation.
  • Payments and lease management are handled via the Klarna app, with a soft credit check during sign-up that does not affect credit scores.
  • Trade-ins can reduce monthly payments, and using an Apple Card earns 3% Daily Cash back.

Context and Rationale

Apple's move comes amid rising memory chip prices impacting device costs industry-wide. This has led to price increases on Macs and iPads and speculation of higher iPhone prices. Leasing offers a more affordable monthly payment alternative to absorb these costs.

The program also aligns with changing consumer habits, as the average smartphone upgrade cycle has extended to around 22 months. The new leasing terms reflect this shift by offering longer contracts and lower monthly fees compared to the previous Upgrade Program, which was based on annual device swaps.

Who Benefits Most?

This leasing option suits customers who prefer frequent upgrades and want to avoid large upfront payments. It offers predictable monthly costs and flexibility at lease end. However, for users who keep devices for multiple years, outright purchase remains more economical over time.

Essentially, the program functions as a subscription model for hardware, fitting Apple’s broader strategy to generate recurring revenue streams beyond software and services.