Introduction to Apple Upgrade

Apple has introduced a new leasing program, Apple Upgrade, backed by Klarna. This program is available for iPhones, iPads, Macs, and Apple Watches. As part of this shift, Apple ended new enrollments in the long-standing iPhone Upgrade Program. This raises questions about potential cost savings for users.

Details of the Apple Upgrade Program

Apple Upgrade allows users to lease devices by paying a monthly fee. The lease terms vary by product. At the end of their lease, customers can upgrade to a newer device, purchase their current device, or return it without further obligations. The program is accessible online, through the Apple Store app, and in Apple retail stores across the U.S. A soft credit check is required when applying, which does not affect credit scores.

The launch signals the closing of new registrations for the iPhone Upgrade Program, which financed iPhones over 24 months, with updates available after 12 payments. This shift aligns with Apple’s ongoing transition in leadership, as John Ternus prepares to replace Tim Cook as CEO by 2026. Apple Upgrade marks one of the initial major steps in this leadership change.

Comparison: Apple Upgrade vs. iPhone Upgrade Program

For users who upgrade annually, comparing costs is crucial. Apple’s pricing indicates that the monthly cost of Apple Upgrade is approximately $11 less across the iPhone 17 Pro Max range compared to the previous iPhone Upgrade Program.

Understanding Cost Differences

The apparent decrease in monthly costs stems from a change in bundled services. The previous iPhone Upgrade Program included AppleCare+ with Theft and Loss protection in the monthly fee. Existing users can retain this coverage until their current agreements expire.

Under Apple Upgrade, AppleCare+ is not included by default and must be purchased separately. AppleCare+ with Theft and Loss currently costs about $13.99 monthly or $139.99 yearly for Pro-level iPhones. Consequently, the $134 annual savings highlighted in Apple’s lease pricing nearly vanishes if users add equivalent protection.

Decisions at the Lease’s Conclusion

Ownership represents another notable difference. In the iPhone Upgrade Program, customers made payments over 24 months and owned the device. Existing members can continue to pay until ownership is achieved.

In contrast, Apple Upgrade customers lease through Klarna. Upon lease completion, options include purchasing, returning the device, or starting a new lease. Customers can also lower initial payments by trading in devices and earn 3% Daily Cash when paying with an Apple Card.

Apple’s Perspective

Apple states that the new program aims to provide flexibility and extend upgrade-style payments to additional devices like Macs, iPads, and Apple Watches. Lease prices start at $17.99 for iPhones, $11.99 for Apple Watches, $24.99 for Macs, and $11.99 for iPads.

Newsweek contacted Apple for comments and is awaiting their response.

Conclusion

For users aiming for annual iPhone upgrades, the new Klarna-backed lease seems to offer about a $134 annual saving when examining advertised monthly costs. However, these apparent savings do not account for AppleCare+ with Theft and Loss coverage, shifting the financial advantage. Essentially, the focus shifts from bundled protection leading to ownership toward a flexible lease model with recurring upgrades.

For further inquiries, Newsweek editors Ben Kelly and James Debens are available.