Apple is set to launch a new leasing program called Apple Upgrade later this month, marking one of the biggest changes to how the company sells its devices. According to a report from Bloomberg, the program will debut on July 28 in the United States, offering customers a subscription-like model for purchasing hardware.

Under the new program, Apple is partnering with Klarna, a Swedish fintech company known for its buy now, pay later services. The partnership will allow Apple to offer lower monthly payments compared to outright purchases or traditional financing. However, shoppers will need to undergo a soft credit check to qualify.

The Apple Upgrade program is designed to work like a subscription for iPhones, iPads, Macs, and Apple Watches. Customers can choose to lease a device for a fixed term—24 months for iPhones and Apple Watches, and 36 months for Macs. During the lease period, users have several options: they can pay off the device early, upgrade to a new model before the term ends, keep the device at the end of the lease, or return it like a car lease. Some of these transactions may incur additional fees.

Not all devices will be eligible for Apple Upgrade. The report notes that the Apple Watch SE, base model iPad, iPhone 16, and MacBook Neo are excluded from the program. This selective approach suggests Apple is targeting its higher-end models to maximize the appeal of lower monthly payments.

Importantly, Apple Upgrade does not include AppleCare coverage, which sets it apart from the existing iPhone Upgrade Program. The iPhone Upgrade Program, launched in 2015, bundled an annual iPhone upgrade with AppleCare+ and required a 24-month loan. Bloomberg reports that Apple plans to discontinue new signups for the iPhone Upgrade Program once Apple Upgrade launches, effectively replacing it.

The timing of the launch is notable. Apple recently raised prices for iPads and Macs, and the upcoming iPhone 17 series (expected in September) is rumored to be more expensive than previous models. By offering a leasing option, Apple gives customers a way to manage these higher price tags without paying the full cost upfront. This strategy could help Apple maintain sales volumes even as device prices climb.

The Apple Upgrade program is part of a broader trend in the consumer electronics industry toward subscription and leasing models. Companies like Google and Samsung have also experimented with similar programs. For Apple, the shift represents a move away from outright sales and toward recurring revenue streams. By partnering with Klarna, Apple leverages the fintech firm's expertise in installment payments and credit assessment.

Industry analysts expect the program to appeal to customers who upgrade their devices frequently, as well as those who prefer predictable monthly payments over large lump sums. However, the absence of AppleCare may be a drawback for some, as separate insurance or extended warranty plans could add to the overall cost. AppleCare+ costs extra and is not bundled into the lease payments.

The program also raises questions about the long-term impact on Apple's resale market. Leased devices that are returned at the end of the term will likely be refurbished and sold through Apple's certified refurbished store or to third-party partners. This could increase the supply of used Apple devices, potentially affecting prices and demand for new models.

From a customer perspective, Apple Upgrade offers flexibility that traditional financing does not. Users can upgrade to a new model after paying off a portion of their current lease, without being locked into a full 24- or 36-month commitment. Early termination fees may apply, but the option to trade in a device before the lease ends could help Apple retain customers within its ecosystem.

The program's reliance on a soft credit check means it is more accessible than some carrier-based financing options, which often require hard credit inquiries. Soft checks do not affect credit scores, making the program appealing to customers who are credit-conscious or have limited credit history.

Apple's decision to partner with Klarna is strategic: Klarna has a strong presence in North America and Europe, and its platform is already integrated into many e-commerce sites. The partnership could eventually extend to other regions outside the U.S., though the initial launch is domestic. Apple has not yet commented on international availability.

The announcement has already sparked discussion among tech enthusiasts and financial analysts. Some see it as a natural evolution for a company that has increasingly focused on services revenue. Apple's services segment, which includes Apple Music, iCloud, and the App Store, generates higher margins than hardware sales. A leasing program could boost customer loyalty and create a steady stream of monthly payments.

Others warn that consumers should carefully read the terms before signing up. Leasing a device may end up costing more than buying it outright over the long term, especially if the customer chooses to keep the device after the lease ends and pays a final purchase fee. Additionally, customers who want to upgrade early may face fees that offset the benefits of lower monthly payments.

The launch date of July 28 is just over a week away. Apple is expected to announce the program officially on its website and through its retail stores. Customers interested in the program will be able to apply online or in-store, with the credit check processed in real time.

For now, the existing iPhone Upgrade Program remains available, but new enrollments will be phased out once Apple Upgrade goes live. Existing iPhone Upgrade Program customers can continue their current plans, but they will not be able to renew into the same program once their term ends. They may, however, switch to Apple Upgrade.

The broader context of this launch is Apple's ongoing effort to make its products more affordable without reducing prices. By lowering the monthly cost barrier, Apple can attract price-sensitive customers who might otherwise choose Android devices or cheaper alternatives. At the same time, the program could discourage customers from switching to other brands, as they would lose the flexibility of the leasing plan.

In summary, Apple Upgrade represents a significant pivot in Apple's hardware sales strategy. The program will compete with carrier installment plans and third-party financing options, but with the added benefit of direct integration into Apple's ecosystem. With lower monthly payments, a subscription-like experience, and the ability to upgrade early, Apple is betting that customers will embrace this new way of owning its devices.

The success of Apple Upgrade will depend on customer adoption, the program's pricing structure, and the overall economic climate. As inflation and interest rates remain elevated, consumers may be more inclined to spread out payments over time. Apple's move could set a precedent for other hardware makers to follow.

With the launch just days away, all eyes are on Apple to see how it will roll out the program and whether it will expand to include more devices or regions in the future. One thing is certain: Apple is not just selling devices anymore—it is selling access.

Source: 9to5Mac News