iPhone Can Now Be Rented! Apple Partners with Klarna to Launch 'Apple Upgrade' Service

Bloomberg reported on Tuesday (21st) citing sources familiar with the matter that Apple (AAPL-US) is preparing to launch a device leasing service named 'Apple Upgrade,' representing one of the most significant changes in the company's hardware sales approach. The service aims to boost product sales by offering lower recurring payments.

Apple Upgrade is scheduled to launch on July 28 and will initially be available at least in the United States. It will apply to most iPhones, Macs, iPads, and Apple Watches, with applications available through Apple's physical retail stores or official website. Apple will partner with fintech company Klarna (KLAR-US), which will provide the financing required for the program.

Following the news, Klarna's stock surged as much as 11% to $20.78, while Apple's share price remained largely flat. Apple declined to comment, and Klarna has not yet responded.

Apple Upgrade will operate similarly to a subscription service. Users can pay off the device in full during the lease period, upgrade early to a new model, or retain the product at the end of the term—some transactions may incur additional fees. Users can also return the device to Apple at the end of the contract, much like leasing a car.

The lease term for iPhones and Apple Watches is 24 months, while Macs and iPads will have a 36-month term. Applicants must pass a soft credit check that does not affect their credit score to qualify.

The launch of this new program comes as Apple recently raised prices on Macs, iPads, and other devices by hundreds of dollars due to industry-wide memory shortages. The market widely expects Apple to raise prices again when it unveils new iPhones in September. Apple plans to market Apple Upgrade as a more affordable alternative to its current installment financing options, with lower monthly payments.

To make way for the new service, Apple will stop accepting new applications for its existing iPhone Upgrade Program and standard installment financing plans. Unlike the current iPhone Upgrade Program, Apple Upgrade will not include AppleCare warranty coverage.

Not all products will be eligible for the new plan. The Apple Watch SE, entry-level iPad, iPhone 16, and MacBook Neo are excluded, and the program does not apply to business or educational procurement.

Apple previously planned to launch its own subscription service for iPhones and other hardware but canceled the initiative in 2024. By partnering with Klarna, Apple can now offer a leasing and subscription-like purchasing model without bearing the financial risk of financing in-house.