Apple has replaced its iPhone Upgrade Program with a new U.S. leasing option operated in partnership with Klarna, according to reporting from Bloomberg’s Mark Gurman. The transition introduces lower base monthly prices for hardware purchases, though customers must navigate separate AppleCare costs and carrier limitations compared to past financing models.
How Apple Upgrade Works with Klarna
The newly launched Apple Upgrade program allows customers to lease iPhones, iPads, Macs, and Apple Watches through a partnership with financial services firm Klarna. According to Bloomberg’s Mark Gurman, Apple stopped accepting new sign-ups for the legacy iPhone Upgrade Program on July 28, though current members can remain in the older program temporarily before transitioning at their next upgrade.
Base pricing under the Klarna-backed system starts at $17.99 per month for iPhones and $11.99 per month for Apple Watches. Financing terms vary by device category, with a 24-month term applied to iPhones and Apple Watches, and a 36-month term established for iPads and Macs.
Pro Tip: Unlike previous iterations, Apple Upgrade does not include AppleCare+ in the monthly fee. Coverage must be purchased separately, with standard AppleCare+ ranging from $9.99 to $13.99 per month, or Apple Care One available at $19.99 per month to cover three devices.
Carrier Rules and Ownership Details
Leased iPhones provided through Apple Upgrade are unlocked, but shoppers must select a supported carrier at checkout. According to program terms, options are restricted to AT&T, Verizon, and T-Mobile, and participants must maintain a postpaid plan. Prepaid cellular plans are ineligible for the leasing option.
Ownership does not transfer to the customer automatically at the end of the lease term. Buyers must pay off the final amount—calculated as the original device cost minus payments made during the lease—to keep the hardware. Alternatively, users must return the device if they choose not to buy it out or decide to upgrade.
Payment Terms, Penalties, and Credit Impact
Missing a payment under the Apple Upgrade program does not immediately disrupt device functionality, despite earlier iOS beta code hints suggesting potential software restrictions for missed payments. Instead, Klarna rolls a missed payment into the following month’s bill without charging late fees.
However, accumulating three consecutive missed payments triggers an automatic lease termination by Klarna, making the full remaining balance due immediately. Klarna subtracts the value of the returned device from the owed balance, but unreturned hardware or unpaid balances are sent to collections and can negatively impact credit scores. Notably, initiating a lease involves only a soft credit check, which does not affect credit standing initially.
Did you know? Klarna does not accept certain credit cards for lease payments, including American Express, Chase, and Capital One. Customers can use other approved cards, such as the Apple Card, to settle their monthly installments.
Device Ineligibility and Alternative Financing
Not all hardware qualifies for the new leasing structure. Apple has excluded several products from Apple Upgrade, including the iPhone 16, iPhone 16 Plus, Apple Watch SE, MacBook Neo, Mac mini, A16 iPad, and Studio Display. Additionally, educational pricing and refurbished devices cannot be purchased through the program.
Customers seeking outright ownership can still utilize Apple Card Monthly Installments, which offers zero-interest financing. Meanwhile, those trading in older devices during an Apple Upgrade lease will have their trade-in value split across monthly payments rather than applied as an upfront discount.
Frequently Asked Questions
Is the iPhone Upgrade Program still active?
No, Apple has discontinued the legacy iPhone Upgrade Program for new sign-ups, replacing it with the Klarna-backed Apple Upgrade leasing option. Existing members can stay in the old program temporarily.
Does Apple Upgrade include AppleCare+?
No. Unlike the previous program, AppleCare+ must be purchased separately as an add-on subscription.
Can I pay off my lease early?
Yes, customers can pay off their lease early without any penalty, though ending a lease early requires paying the remaining balance and returning the device unless a buyout is completed.
Are trade-ins allowed with Apple Upgrade?
You can trade in an old iPhone when initiating a lease, with the trade-in value divided across your monthly payments. However, trade-ins are not permitted when returning a device to upgrade to a newer model.
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