I spent years inside Apple’s world. Badge, laptop, the whole deal. I watched the machine work from the inside, the way the company turns desire into revenue better than almost anyone on the planet. So when Apple rolled out a new leasing program with Klarna this week, my ears perked up for two reasons. One, I do know exactly how good Apple is at making quality, expensive things more affordable. Two, Klarna kinda has a reputation, and it may not be the good kind.
Let’s break down what actually happened, how the whole thing works, and then let’s kinda play both sides, because there’s a real case for this being smart and a real case for this being a slow motion trap.
What Just Happened
On July 28, 2026, Apple launched something called Apple Upgrade. It’s a leasing program built in partnership with Klarna, the Swedish buy now pay later (BNPL) company you’ve probably seen plastered across checkout pages for jeans, sneakers, and apparently now burritos through DoorDash! This new program replaces the old iPhone Upgrade Program and iPhone Payments, both of which Apple ran in-house.
Here’s the basic idea. You can lease an iPhone or Apple Watch for either 12 or 24 months. Mac and iPad leases run 24 or 36 months. Starting prices are $17.99 a month for iPhone, $11.99 for Apple Watch, $24.99 for Mac, and $11.99 for iPad. Trade in your current device when you enroll and your monthly payment drops even more. Pay with an Apple Card and you get 3 percent Daily Cash back on the lease payments. If you don’t already have an Apple Card, you can apply through my link and when approved, you get $75 Daily Cash when you also make your first purchase within 30 days!
| Device | Monthly payment | Total after 12 months | Total after 24 months |
|---|---|---|---|
| iPhone | $17.99 | $215.88 | $431.76 |
| Apple Watch | $11.99 | $143.88 | $287.76 |
| iPad | $11.99 | $143.88 | $287.76 |
| Mac | $24.99 | $299.88 | $599.76 |
| TOTAL | $66.96 | $803.52 | $1,607.04 |
Now, when your lease term ends, you basically get three choices. Upgrade to a new device and start a fresh lease. Buy the device you’ve been leasing with one final payment. Or send it back and simply walk away.
Customers do go through a soft credit check to enroll, which won’t ding your credit score just for applying. There’s also no security deposit required! Klarna says it won’t charge late fees either! That’s wild. However, if you miss three months of payments, they’ll terminate the lease. Everything gets managed through the Klarna app, not Apple’s own systems, which is a bit of a shift in itself. I mean, it’s Apple’s way to have greater control of the process.
A Little History, Because Context Matters
Apple’s had installment programs for a while. The iPhone Upgrade Program used to let you finance a phone over 24 monthly payments, and it bundled in AppleCare+, with the option to upgrade again after just 12 payments. iPhone Payments was a similar setup without the AppleCare bundle. Both were interest free and both were run directly through Apple, no third party lender involved.
The timing of this new leasing pivot isn’t totally random. Apple’s been dealing with something the industry is calling “RAMageddon,” a memory chip shortage driven largely by AI companies buying up chip supply, which has pushed hardware costs up across the board. Apple already raised prices on Macs and iPads earlier this year. Leasing is Apple’s way of keeping the sticker shock from scaring people off. Lower the monthly number, and the higher total cost becomes a lot easier to swallow.
Now, who the heck is Klarna in all this? Founded in Stockholm back in 2005 by three guys who actually placed last in the business school competition where they pitched the idea. They kept going anyway, and Klarna eventually became one of the biggest buy now pay later companies in the world, with tens of millions of users globally! Their whole model is built on splitting payments into smaller, more digestible chunks, whether that’s four payments for a concert t-shirt or, now, monthly payments for an iPhone.
Who Qualifies
Apple Upgrade requires that soft credit check through Klarna. It’s available to customers shopping online, through the Apple Store app, or in physical Apple Store locations in the U.S. Beyond passing that credit check, the specifics of your eligibility criteria haven’t really been laid out in detail publicly, but it’s reasonable to expect Klarna is looking at the same kind of financial signals any lender would check before handing over a few thousand dollars of hardware.
The Case For It: Why This Is Attractive
So, let’s take a look at this thing for a second. For your average consumer, the monthly numbers are genuinely lower than the older iPhone Upgrade Program. If you’re someone who upgrades your phone every year or two anyway, leasing would actually save you money compared to buying outright and reselling on your own. I’ve been there, done that. No security deposit and no late fees removes some of the sting of BNPL products people already distrust. And if your phone breaks, gets stolen, or you just get tired of it, you have an exit ramp built in. You’re not stuck. Keep in mind, you’ll have to add AppleCare to your devices separately to protect your new devices from accidents like drops and spills. You’ll select the AppleCare coverage when you enroll in the Apple Update program., Then, your return will be even easier.
For Apple, this is a smart supply chain and revenue play. It smooths out the seasonality of iPhone sales, since people aren’t just buying in September launch windows anymore, they’re locked into ongoing lease cycles. It also nudges customers toward faster upgrade cycles, which matters because the average person is now holding onto their iPhone for almost four years, way longer than Apple would like. And with hardware costs rising from the chip shortage, leasing keeps that monthly number small enough that people don’t flinch and walk away.
What About Small Business Owners?
Here’s another thing I’ve been thinking about! Let’s say you run your own shop, freelance, or you’re bootstrapping a startup out of your spare bedroom. A predictable $17.99 or $24.99 a month for the gear that actually runs your business hits different than dropping a grand or two out of cash flow all at once, especially in those early years when every dollar matters and cash flow is king.
If you’re a photographer leasing a Mac to edit on, a consultant who needs a reliable iPhone for client calls, or a contractor running your whole operation off an iPad in the truck, this starts to look less like a consumer gimmick and more like a legitimate business tool decision. Treating your hardware like a monthly operating expense instead of a big irregular capital outlay can actually make budgeting easier, and knowing you can upgrade every year or two keeps you from running client work on dated hardware. For a business where the tech is mission critical, that predictability has real value in my opinion.
With that said, before you lease your business gear through Klarna, please talk to your accountant or bookkeeper. Leasing versus buying can affect how you write off equipment on your taxes, and the rules around Section 179 deductions and depreciation are different for owned assets versus leased ones. I am totally not a tax professional! So please get real advice before you decide this is your business’s new equipment strategy. But as a concept, using a leasing model to keep your monthly overhead predictable while running a business? That part actually makes sense to me.
The Case Against It: Why This Might Be a Bad Idea
Here’s where my inner skeptic wakes up. You never actually own the thing! That’s the entire nature of a lease. If you make every payment for two years and decide not to buy it out at the end, you’ve paid for the use of a device you have to hand back. That’s money spent with nothing physical to show for it.
Buy now pay later companies as a category have a real track record of trouble. Missed payments among BNPL users have been climbing, and total household debt in this country just keeps setting new records. U.S. household debt, reached an all-time high of nearly $19 trillion in the first three months of the year, according to the Federal Reserve Bank of New York. Klarna’s own leadership has acknowledged rising loan defaults in recent years. Splitting a big purchase into small monthly chunks makes expensive things FEEL cheap in the moment, and that’s exactly the psychological trick that gets people into trouble. It’s the same feeling I had standing in that guitar shop years ago hearing “it’s just $23 a month.” Low monthly numbers hide the total cost, and they hide it on purpose.
There’s also the credit building question. Traditional financing, even Apple’s old interest free installment plans, can sometimes help build your credit history. Leasing through a BNPL provider historically hasn’t offered that same benefit consistently. You’re taking on a financial obligation without necessarily getting the credit score upside in return.
And if we zoom out for a second, Apple encouraging faster upgrade cycles isn’t just a consumer convenience story, it’s also a strategy to get you spending more often. A program engineered to make you comfortable trading in your device every year isn’t purely about serving you. It’s about keeping revenue steady for Apple. Hey…in the end we’re all here to make money.
Where I Land
Okay, I’m not a fan of BNPL programs in general. I’m also not going to tell you leasing an iPhone is inherently reckless. I mean If you’re disciplined, you track your payments, and you genuinely upgrade often enough that leasing beats buying, this could work fine for you. But if you’re leasing just because $17.99 feels a lot less scary than an $1000 or $1,200 price tag, that’s the exact same trap I walked into with that amp. The math didn’t change. Just the way it was presented to me.
So let’s ask yourself the same questions every time financing shows up dressed in friendly clothing. What’s the total cost over the full lease term. What happens if you miss payments. What do you actually walk away with at the end. If the answer to that last one is “nothing,” you need to decide if that’s a price you’re actually willing to pay for convenience.
Horns up my friends 🤘