Apple to replace iPhone Upgrade Program with Klarna-backed lease-to-own scheme
The tech giant is shifting to a 24-to-36-month lease model backed by Klarna, excluding budget devices and AppleCare subscriptions as component costs rise.
Apple is preparing to introduce the 'Apple Upgrade' programme on 28 July 2026, a move that will replace the existing iPhone Upgrade Program and standard financing options with a broader lease-to-own model. According to reports from Bloomberg, the new initiative will cover iPhones, iPads, Macs, and Apple Watches, marking a significant expansion of Apple’s consumer financing infrastructure.
The scheme is backed by financial services firm Klarna and will require a soft credit check for participants to sign up. The structure mirrors a traditional car lease, allowing users to upgrade to a new device early in the term, or to keep or return the hardware at the conclusion of the lease period. This model aims to provide flexibility for consumers amid rising hardware costs driven by component and RAM shortages.
Lease terms will vary by device category, with 24-month contracts offered for iPhones and Apple Watches, while iPads and Macs will carry 36-month leases. However, eligibility will be restricted for certain entry-level products. Budget devices, including the base iPad, iPhone 16, Apple Watch SE, and the MacBook Neo, are reportedly excluded from the programme.
Unlike its predecessor, the new Apple Upgrade programme will not include AppleCare subscriptions. This exclusion comes as Apple has recently increased prices on AppleCare services. The financing shift follows a broader price increase across nearly all Apple products implemented in recent months, although the standard iPhone was not part of that specific hike.
Market observers note that the upcoming launch of the iPhone 18 Pro series later this year could further influence pricing structures. As Apple navigates supply chain pressures and evolving consumer financing expectations, the transition to this Klarna-backed model represents a strategic adjustment to its revenue and customer retention strategies.
