Apple launches iPhone leasing program at $17.99/month via Klarna partnership

Apple customers in the U.S. will soon be able to lease an iPhone for up to two years at a price starting at $17.99 per month, the company announced on Tuesday.

Program Details

The program, called Upgrade, is a partnership with Klarna, a provider of buy now, pay later loans. It will be offered at Apple's physical retail stores as well as its online store.

• After passing a soft credit check, customers will be offered a one- or two-year lease on an iPhone.
• Similar leasing options will be available for Apple Watch, Mac, and iPad.
• Macs and iPads will be available under two- or three-year lease terms.

Pricing and Device Options

Prices will vary significantly depending on the device:

| Device | Monthly Cost | Lease Term | |--------|-------------|------------| | iPhone 17 Pro (unlocked) | $31.99 | 2 years | | iPhone 17 Pro (unlocked) | $45.99 | 1 year | | Entry-level iPhone 16 | Not included | — | | MacBook Neo | Not included | — |

Context and Market Strategy

The announcement comes one month after Apple raised starting iPad and Mac prices by at least $100, with some models increasing by more than $1,000, citing the global memory crunch. Analysts expect iPhone price hikes this year and note that leasing allows Apple to shift focus from a higher upfront sticker price to a lower monthly payment.

"Most of Apple's consumers, especially in the U.S. and other developed markets, are buying devices on installment plans or trade-ins, so we can expect to see much more aggressive offers," said Nabila Popal, senior research director at IDC, in an interview with CNBC.

Investor and Industry Implications

Apple is exploring new ways to offer iPhones through installment payments — a strategy investors have long thought could help smooth the seasonality of the business and reduce the company's reliance on hit device cycles for growth. The new program may also encourage customers to replace devices sooner, as the average iPhone replacement cycle has stretched to nearly four years, according to Bernstein estimates.

Lease Terms

• Devices must be returned at the end of 24 months.
• Users can purchase their phone at that time with an additional payment, or upgrade to a new device.
• No security deposit is required.
• Klarna will not charge late fees, but leases will be terminated after three months of missed payments.

Competitive Landscape

The new offering with Klarna provides a significantly cheaper leasing option than what has been available. Through the previous iPhone Upgrade Program — which included AppleCare warranty — users paid more than $42 per month in 24 installments, with financing from Citizens Bank. Apple announced on Tuesday it has discontinued the iPhone Upgrade Program in the U.S. and will transition customers to Apple Upgrade.

With this new plan, Apple will compete more directly with carriers such as AT&T, Verizon, and T-Mobile, which have traditionally used device financing and trade-in subsidies to attract customers and lock them into multiyear wireless plans. Apple also offers zero-interest financing for its products through a separate program.

Price Outlook

Since the announced price hikes in June, analysts have been speculating about higher iPhone prices:

• Morgan Stanley estimates Apple may need to raise the price of the iPhone 18 Pro by roughly $200 to preserve its gross margin.
• TechInsights reports that higher memory and other component costs could add as much as $300 to an iPhone's bill of materials, based on a component-level teardown.

Meanwhile, Apple is pushing its product mix further upmarket. Analysts expect a foldable phone to debut alongside the iPhone 18 Pro lineup in September, with some estimates putting its price at around $2,500.

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