Apple Launches Device Lease Program With Klarna as Prices Climb

A Monthly Payment Model Arrives as Hardware Costs Rise

Apple has rolled out a leasing program for US consumers who want to avoid the sticker shock of buying iPhones, iPads, Apple Watches, and Macs outright. The service, called Apple Upgrade, offers monthly payment plans starting at $12 and lets subscribers swap devices for newer models when their lease expires.

The timing is notable. At DailyTechWire, we've tracked a steady march upward in Apple's device pricing over the past two years, with iPad and Mac lines seeing particularly sharp increases in recent months. The next iPhone generation, widely anticipated for a September reveal, is expected to push pricing further still. A lease structure that smooths those costs into recurring payments addresses both consumer affordability concerns and Apple's drive to lock in predictable revenue streams.

How the Program Works

Apple Upgrade operates through Klarna, the Swedish fintech that already powers buy-now-pay-later options in Apple Pay. Subscribers must pass a credit approval process before enrolling. Lease terms run 12 or 24 months for iPhones and Apple Watches, and 24 or 36 months for iPads and Macs, according to Apple.

Monthly fees begin at $18 for iPhone, $12 for both Apple Watch and iPad, and $25 for Mac. When the lease period ends, customers face three choices: upgrade to a newer device for an additional fee, purchase the current hardware with a one-time payment, or return it to an Apple store and exit the program. Early payoff is available but carries extra charges.

AppleCare coverage can be bundled into any lease agreement. Klarna provides a dedicated app for tracking payments and lease details.

What's In and What's Out

Not every product in Apple's lineup qualifies for leasing. The company has excluded several mid-tier and entry-level options: iPhone 16, iPhone 16 Plus, Apple Watch SE, MacBook Neo, Mac mini, iPad (A16), and Studio Display are all ineligible for Apple Upgrade.

The exclusions suggest Apple is positioning the program around higher-margin devices where monthly payments offer the most dramatic sticker-price relief. A $1,200 MacBook becomes $50 per month over two years; a $400 iPhone SE remains a one-time purchase.

Replacing Older Financing Options

Apple Upgrade will sunset the long-running iPhone Upgrade Program and iPhone Payments options in the US. Existing iPhone Upgrade Program members can transition to the new service once they become eligible, or they can switch to Apple Card Monthly Installments, buy their device outright, or move financing to a carrier.

The shift consolidates Apple's US financing under a single brand and extends the lease model beyond phones for the first time. It also deepens the company's partnership with Klarna, which has been available as a payment option in Apple Pay since 2022.

The Broader Context

At DailyTechWire, we've followed similar moves across consumer hardware. Samsung and Google already offer trade-in and installment programs; carriers have long subsidized device costs through service bundles. What sets Apple Upgrade apart is the explicit lease framing: you don't own the hardware until you make that final purchase payment, and the expectation is that many subscribers will churn into newer models rather than buy out their devices.

That model serves Apple's interests in two ways. First, it creates a predictable upgrade cycle, smoothing demand and inventory planning. Second, it generates a steady flow of used devices that can be refurbished and resold, feeding Apple's growing emphasis on circular supply chains.

For consumers, the trade-off is clear. Monthly payments ease short-term budget pressure, but over a full lease term, the total cost typically exceeds the upfront purchase price. The real value lies in optionality: the ability to walk away or upgrade without the hassle of reselling old hardware.

Why Apple Shelved an Earlier Plan

Apple reportedly explored a similar subscription offering as recently as 2024 but shelved it over concerns about regulatory oversight and financial reporting. Leasing arrangements can trigger complex accounting rules, and any program that resembles consumer credit invites scrutiny from financial regulators.

By partnering with Klarna, Apple offloads much of that compliance burden. Klarna holds the lease contracts and manages credit risk; Apple simply integrates the service into its retail and online channels. The structure mirrors how Apple Card operates through Goldman Sachs (and more recently other banking partners), keeping Apple's core business focused on hardware and software while financial partners handle the regulatory heavy lifting.

What This Means for the Upgrade Cycle

The funding rounds we've followed across the region suggest that device financing is becoming a critical battleground for consumer electronics brands. In markets where smartphone penetration is high but replacement cycles have lengthened, leasing programs can accelerate upgrades and defend market share.

Apple's move comes as the company faces pressure to maintain growth in a maturing smartphone market. iPhone sales have plateaued in many developed markets, and longer device lifespans mean fewer opportunities to sell new hardware. A subscription model that normalizes annual or biennial upgrades could stabilize unit sales even if overall market demand stagnates.

At the same time, the program introduces new risks. If a significant share of Apple's installed base shifts to leasing, the company becomes more exposed to credit defaults and economic downturns that squeeze consumer budgets. Klarna absorbs much of that risk, but any widespread payment failures could still disrupt Apple's product pipeline and resale operations.

The exclusion of entry-level devices suggests Apple is managing that risk carefully, targeting the program at customers with stronger credit profiles and higher willingness to pay for premium hardware. The $12-per-month floor for Apple Watch and iPad keeps monthly costs accessible, but the absence of cheaper iPhone and Mac options ensures the program doesn't cannibalize outright sales of lower-margin products.

The Road Ahead

Apple Upgrade arrives at a moment when the company is recalibrating its pricing strategy across the product line. The recent iPad and Mac price increases, combined with expectations of higher iPhone costs in the fall, point to a sustained push toward premium positioning. A lease program that makes those higher prices more palatable fits neatly into that strategy.

Whether consumers embrace the model at scale remains to be seen. Early adoption will likely skew toward existing iPhone Upgrade Program members and customers already comfortable with financing through Apple Card or carrier installment plans. Broader uptake will depend on how Apple markets the program, the competitiveness of monthly pricing relative to carrier offers, and whether the company can deliver a seamless upgrade experience that justifies the total cost premium over outright purchase.

For now, Apple Upgrade represents a bet that the future of consumer electronics is less about ownership and more about access, with hardware cycling through hands on predictable schedules and revenue flowing in steady monthly streams. If the model succeeds, expect other premium device makers to follow.