Apple announced a new leasing program called Upgrade, allowing U.S. customers to lease an iPhone for up to two years starting at $17.99 per month through a partnership with Klarna, a buy now, pay later provider. The program will be available both in Apple’s physical retail stores and online, and will require customers to pass a soft credit check. Options are also available for Apple Watch, and two- or three-year leases for Macs and iPads. At the end of the lease, customers can return the device, purchase it with an additional payment, or upgrade to a new device. No security deposit is required, and Klarna will not charge late fees, but leases will be terminated after three months of missed payments. Prices vary by device, with an unlocked iPhone 17 Pro costing $31.99 per month for two years or $45.99 for one year. Entry-level devices like the iPhone 16 and MacBook Neo are not included in the program [1].
This initiative follows Apple’s recent price increases for iPads and Macs, with starting prices rising by at least $100 and some models by more than $1,000, due to a global memory crunch. Analysts expect further iPhone price hikes this year, and suggest that leasing will help Apple shift consumer focus from higher up-front costs to more manageable monthly payments. Nabila Popal, senior research director at IDC, noted that most Apple consumers in developed markets already use installment plans or trade-ins, and expects more aggressive offers as a result. Morgan Stanley estimates that Apple may need to raise the price of the iPhone 18 Pro by about $200 to maintain its gross margin, while TechInsights reports that higher memory and component costs could add up to $300 to an iPhone’s bill of materials [1].
The new leasing program is seen as a strategy to smooth out the seasonality of Apple’s business and reduce reliance on hit device cycles for growth. It could also encourage customers to replace their devices more frequently, as the average iPhone replacement cycle has stretched to nearly four years, according to Bernstein estimates. Apple is also expected to push its product mix further upmarket, with analysts anticipating the debut of a foldable phone alongside the iPhone 18 Pro lineup in September, with some estimates putting its price at around $2,500 [1].
CONCLUSION
Apple’s new leasing program with Klarna represents a significant shift in its device sales strategy, aiming to make higher-priced devices more accessible through lower monthly payments. This move is expected to help Apple manage rising component costs, encourage more frequent device upgrades, and potentially smooth out revenue seasonality. The market impact is high, as the program could influence consumer purchasing behavior and Apple’s overall growth trajectory.