Apple has partnered with financial services company Klarna to launch a new iPhone leasing service in the United States called Upgrade, with pricing starting at $17.99 a month. The report said similar plans are set to be introduced later for Apple Watch, Mac, and iPad products.
Upgrade plan starts at $17.99 per month
Klarna is known for its buy-now-pay-later offering. Under the new Upgrade program, consumers can apply through Apple’s physical retail stores and online store. After passing a credit review, they can choose lease terms of one, two, or three years depending on the product line.
When the lease ends, users must return the device, pay an extra amount to buy it out, or upgrade to a newer model. The plan does not charge deposits or late fees, but the lease will be terminated if payments are missed for three straight months.
Pricing varies by model, and Apple has ended its previous upgrade plan
Monthly payments depend on the device tier. For example, the report said an iPhone 17 Pro costs $31.99 a month on a two-year term, or $45.99 a month on a one-year term. Some entry-level devices, including the iPhone 16 and MacBook Neo, are not included in the program.
Apple has also shut down the earlier iPhone Upgrade Program that it operated with Citizens Bank and is transitioning existing users to the new Klarna-backed Upgrade service.
Rising hardware costs are part of the backdrop
The report linked the leasing push to higher iPhone component prices. It said Apple had previously raised the prices of some iPad and Mac products by between $100 and $1,000, citing a global memory shortage, which drew backlash from some Apple users.
According to TechInsights, higher memory and related component costs could increase an iPhone bill of materials by as much as $300. Morgan Stanley estimated Apple may need to raise the price of the iPhone 18 Pro by around $200 to maintain gross margins. The report also said the industry expects Apple to unveil a foldable smartphone in September priced at about $2,500, pushing the ceiling of its premium lineup higher.
IDC says installment payments and trade-ins are already common
IDC said the average iPhone replacement cycle has now extended to nearly four years. Nabila Popal, senior research director at IDC, told CNBC that Apple buyers in the U.S. and other developed markets commonly purchase new devices through installment plans or trade-ins. On that basis, the report said Apple is expected to offer attractive deals to retain existing users.
The new service may compete more directly with carriers
The article said leasing shifts attention away from a high upfront payment and toward a lower monthly bill. For Apple, installment payments and lower-cost leasing can help smooth seasonal swings in hardware sales, reduce dependence on a single model cycle, and encourage users to replace devices more often through fixed-term contracts.
U.S. telecom carriers have long relied on installment plans and trade-in programs to keep customers tied to their services. With Klarna Upgrade, Apple could compete more directly with operators including AT&T, Verizon, and T-Mobile. The report added that Apple Pay users can already access short-term loans through Klarna or its rival Affirm.