iPhone Monthly Rental Without Upfront Cost! Apple Launches 'Apple Upgrade' with Klarna, Swap for New at End

Apple (AAPL-US) announced a new device leasing program, 'Apple Upgrade,' in the U.S. on Tuesday (28th), partnering with buy-now-pay-later provider Klarna (KLAR-US) to allow consumers to rent an iPhone from as low as $17.99 per month. The new program also covers Apple Watch, iPad, and Mac, replacing the existing iPhone Upgrade Program and iPhone Payments.

Apple Upgrade offers 12-month or 24-month lease terms for iPhone and Apple Watch, while Mac and iPad are available with 24-month or 36-month options. iPhone rentals start at $17.99 per month, Apple Watch and iPad at $11.99, and Mac from $24.99. AppleCare+ is not included in the rental fee and can be purchased separately by consumers.

For a 256GB iPhone 17 Pro priced at $1,099, the 24-month plan costs $31.99 per month, while the 12-month plan is $45.99. Rental fees vary based on the device, lease term, and trade-in value of the old device, with the trade-in amount deducted monthly from the rental fee.

At the end of the lease term, consumers can return the device and exit the program, sign a new lease to upgrade, or pay the remaining balance in full to own the product. Since Klarna does not charge leasing fees, the total amount paid—should the consumer choose to buy—will generally equal the product's retail price, excluding taxes.

Applicants must pass Klarna's soft credit check and are not required to pay a deposit. Klarna does not charge late fees, but if a user fails to make payments for three consecutive months, the lease will be terminated, and the consumer must return the device and repay the outstanding balance after deducting the equipment's residual value.

iPhone leasing users must select a carrier plan from AT&T (T-US), Verizon (VZ-US), or T-Mobile (TMUS-US). Prepaid SIMs and mobile virtual network operators (MVNOs) are not eligible. However, leased iPhones are not locked to a specific carrier, allowing users to switch freely among the three providers.

Apple states that most iPhone, iPad, Mac, and Apple Watch models are eligible for the new program, but the iPhone 16 series, Apple Watch SE, MacBook Neo, Mac mini, and entry-level iPad are excluded. Education discounts, refurbished products, and enterprise or government procurement programs are also ineligible.

Apple is launching this new leasing program amid rising memory and component costs. The company has already increased the starting prices of certain Mac and iPad models by at least $100. Morgan Stanley estimates that to maintain gross margins, the iPhone 18 Pro may need to be priced approximately $200 higher. By emphasizing lower monthly payments, Apple can mitigate the impact of price increases and encourage iPhone users—who upgrade on average every four years—to upgrade earlier.

The new program also enables Apple to directly compete with U.S. carriers' device installment and trade-in programs, while helping reduce reliance on revenue tied to new device sales cycles. Apple Upgrade is now available on Apple's U.S. website and in physical stores.