Apple will begin offering U.S. customers the option to lease iPhones for up to two years starting at $17.99 per month through a new partnership with buy-now-pay-later provider Klarna, the company announced Tuesday.
The program, named Upgrade, will be available both in Apple’s physical retail locations and through its online store. After customers pass a soft credit check, they can choose a one- or two-year lease on an iPhone. Similar options will be available for the Apple Watch, while Macs and iPads can be leased for two or three years.
Under the leasing structure, devices must be returned after 24 months. Customers will have the option to purchase their phone with an additional payment at that time or upgrade to a newer model. Klarna won’t require a security deposit or charge late fees, though it will terminate leases after three months of missed payments.
Pricing Varies by Device
Monthly costs will differ significantly based on the device model. An unlocked iPhone 17 Pro will cost $31.99 per month for a two-year lease or $45.99 for one year, according to the announcement. Some entry-level devices, including the iPhone 16 and MacBook Neo, won’t be included in the program.
The new Klarna partnership offers considerably lower monthly payments than Apple’s existing iPhone Upgrade Program, which includes AppleCare warranty coverage and charges more than $42 per month for 24 installments through Citizens Bank financing. Apple said Tuesday it is discontinuing the iPhone Upgrade Program in the U.S. and will transition those customers to Apple Upgrade.
Response to Rising Component Costs
The announcement follows Apple’s June decision to raise starting prices for iPads and Macs by at least $100, citing a global memory shortage. Some models saw price increases exceeding $1,000. Analysts expect similar price hikes for iPhones this year and view the leasing program as a way for Apple to emphasize lower monthly payments rather than higher upfront costs.
“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,” Nabila Popal, senior research director at IDC, told CNBC following the June price increase announcement.
Morgan Stanley estimates Apple may need to raise the iPhone 18 Pro price by roughly $200 to maintain its gross margin. TechInsights analysis suggests higher memory and component costs could add as much as $300 to an iPhone’s bill of materials based on component-level teardowns.
Strategic Shift Toward Recurring Revenue
The leasing program represents Apple’s continued effort to expand installment payment options, a strategy investors believe could help reduce the company’s dependence on cyclical device launches and smooth out seasonal revenue fluctuations. The program may also encourage customers to replace devices more frequently. Bernstein estimates the average iPhone replacement cycle has stretched to nearly four years.
The new offering puts Apple in more direct competition with wireless carriers like AT&T, Verizon, and T-Mobile, which have traditionally used device financing and trade-in subsidies to attract customers and secure multiyear contracts.
Apple already offers zero-interest financing through Apple Card Monthly Installments and provides short-term loans from Klarna or rival Affirm for Apple Pay users.
Meanwhile, Apple continues pushing its product lineup toward premium pricing. Analysts expect a foldable phone to debut alongside the iPhone 18 Pro lineup in September, with some estimates placing its price around $2,500.
Apple is scheduled to report third-quarter earnings Thursday. The report will be CEO Tim Cook’s final quarterly earnings announcement before he transitions to executive chairman of the board.
Source: www.cnbc.com — https://www.cnbc.com/2026/07/28/apple-plans-to-lease-iphones-for-17point99-a-month-through-klarna-deal.html
This article is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Do your own research and consult a licensed professional before making financial decisions.
