Rising memory chip costs driven by the AI boom have pushed up computer and device prices this year, prompting Apple to introduce a new way for customers to spread the cost. On Tuesday, the company announced that US shoppers can now lease an iPhone for as little as $17.99 a month, with similar financing options available across its other hardware lines.
How the Program Works
Called Upgrade, the programme is offered in partnership with buy-now-pay-later firm Klarna and is available online and at Apple Stores after a soft credit check. Customers can lease an iPhone over 12- or 24-month terms, while Apple Watches and iPads start at $11.99 a month.
Macs can be leased from $24.99 a month over 24- or 36-month terms. No security deposit is required, Klarna does not charge late fees, and a lease is cancelled if a customer misses payments for three consecutive months. At the end of the lease, customers return the device to Apple, although they can choose to pay it off early or upgrade to a new lease.
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Following A Round Of Price Hikes
The launch comes about a month after Apple raised prices on several products, including iPads and Macs, by $100 to $500, citing the ongoing global memory chip shortage. Some models saw price increases of more than $1,000. Analysts, including IDC's Nabila Popal, have suggested that as retail prices rise, more manufacturers will turn to instalment-style financing to keep monthly payments more affordable despite higher upfront costs.
Pricing under Upgrade varies by device tier. For example, an unlocked iPhone 17 Pro costs $31.99 a month over 24 months or $45.99 a month over 12 months, while entry-level models such as the iPhone 16 and MacBook Neo are excluded from the programme.
Part Of A Broader Pricing Strategy
Industry analysts have long viewed instalment financing as a way for Apple to smooth the seasonality of its hardware business and reduce its reliance on major product launches to drive growth. That strategy has become even more relevant as device replacement cycles lengthen. Bernstein estimates the average iPhone upgrade cycle has stretched to nearly four years, significantly longer than the replacement cycle that fuelled Apple's earlier growth.
Apple has replaced its previous iPhone Upgrade Program - which bundled AppleCare with financing through Citizens Bank—with the new Klarna-backed leasing model.
ALSO READ | Apple Upgrade Launched: iPhone Leases Start At $17.99 A Month
The move also puts Apple in more direct competition with wireless carriers such as AT&T, Verizon and T-Mobile, which have traditionally relied on device financing and trade-in credits to encourage customers to remain on multiyear plans. Separately, Apple continues to offer zero-interest financing through its Apple Card Monthly Installments programme, while Klarna and rival Affirm provide short-term loans for Apple Pay purchases.
Higher Prices Could Continue
Speculation over further iPhone price increases has intensified since Apple's June price hikes. Morgan Stanley analysts have suggested the iPhone 18 Pro may require a price increase of around $200 to preserve profit margins, while a TechInsights teardown estimates that rising memory and other component costs could add as much as $300 to Apple's manufacturing cost per device.
Apple is also widely expected to unveil its first foldable iPhone alongside the iPhone 18 lineup in September, with some analysts forecasting a price tag of around $2,500.
Apple reports third-quarter earnings on Thursday, the last such report CEO Tim Cook is expected to present before transitioning to executive chairman of the board.
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