Apple Upgrade program offers 12-month leases on iPhones and Macs

Apple's new Apple Upgrade program, backed by Klarna, offers 12- and 24-month leases on iPhones and Apple Watches — lowering monthly payments while removing device ownership from the equation.

"Klarna is proud to power Apple Upgrade, giving customers a new way to access the Apple products they love," a Klarna spokesperson said in the announcement.

The program replaces Apple's existing iPhone Upgrade Program for new enrollments, though current members can remain on the old plan. Eligible devices include iPhone, Mac, iPad and Apple Watch, with 12- and 24-month lease terms for iPhones and Watches. Lower-cost models such as the iPhone 16, Apple Watch SE and entry-level iPad are excluded, according to Bloomberg's Mark Gurman. AppleCare+ is not bundled into the monthly payment — a notable departure from the previous program, which included device protection.

The shift from ownership to leasing could accelerate Apple's hardware upgrade cycle while generating predictable recurring revenue. For Klarna, the partnership with the world's most valuable company — Apple's market cap recently topped $3.5 trillion — provides a credibility boost that pressures buy-now-pay-later rivals such as Affirm.

At the end of the lease term, customers can return the device, upgrade to a newer model or pay an additional amount to keep it, according to the announcement. The program is available in the United States starting Tuesday.

The move marks Apple's biggest change to its hardware financing strategy since launching the iPhone Upgrade Program in 2015. By unbundling AppleCare+ and offering shorter 12-month terms, Apple is targeting customers who want lower monthly payments without committing to extended coverage plans. The previous program required a 24-month installment agreement with AppleCare+ included, making monthly payments higher.

What This Means for Apple and Klarna

For Apple, the program creates a direct leasing channel that bypasses carrier financing and third-party installment plans. Apple's Services segment, which generated $24.2 billion in the most recent quarter, could benefit from a larger installed base of users on regular upgrade cycles who are more likely to subscribe to iCloud, Apple Music and other services. The recurring revenue from hardware leases also adds a new, predictable income stream to Apple's financial profile.

For Klarna, the partnership represents its highest-profile retail collaboration. The Swedish fintech, which has been positioning for a potential initial public offering, gains access to Apple's massive US customer base. The deal also signals that traditional BNPL models are expanding into longer-term hardware leasing — a segment dominated by carriers and device-protection providers. Klarna's role as the leasing provider could drive significant transaction volume, though specific financial terms were not disclosed.

Apple shares, which have gained roughly 20% this year, trade at about 30 times forward earnings. The leasing program is unlikely to materially move near-term revenue but could support Apple's efforts to deepen customer loyalty and increase the frequency of hardware upgrades.

This article is for informational purposes only and does not constitute investment advice.