Apple doesn’t seem interested in making its increasingly expensive devices cheaper. Instead, it can make the price easier to ignore.
The company plans to launch Apple Upgrade, a Klarna-backed rental program for most iPhones, iPads, Macs and Apple Watches, on July 28 in the United States, according to a Bloomberg report.
The announced leasing program comes less than a month after Apple raised prices on much of its hardware lineup, blaming a global shortage of memory and storage chips. The MacBook Air went from $1,099 to $1,299, while the iPad Air went from $599 to $749.
Apple is not coming out of a bad quarter either. In its latest earnings release, the company called it its “best March quarter ever,” with revenue of $111.2 billion for the quarter ended March 28, up 17% from a year earlier. It also posted a net profit of nearly $29.6 billion during the same period, according to Apple’s financial statements.
This makes Apple Upgrade look less like a lifeline for a struggling company and more like a way to protect sales without reversing these price increases. A $1,299 MacBook Air is still a $1,299 MacBook Air, but framing it as three years of payment makes the price easier to swallow.
This strategy could be particularly effective at a time when more Americans are borrowing and using credit to buy, and the majority of households don’t have much cash to fall back on. Requests for new credit reached their highest rate in nearly five years in June, according to the Federal Reserve Bank of New York. A separate Federal Reserve survey found that 37% of adults would need to borrow money or sell something to cover a $400 emergency expense.
That’s the trick behind “Buy now, pay later”: you don’t have to afford the purchase, just the first payment.
A lower payment is not a lower price
Apple Upgrade would work more like a car lease than the company’s current financing options. Customers can upgrade early, return the device at the end of the contract, or pay the remaining balance to keep it. Some of these choices may incur additional charges.
The announced rental periods are 24 months for iPhones and Apple Watches and 36 months for Macs and iPads. Signing up would require a simplified credit check, and the program would be offered on Apple’s website and retail stores.
Apple plans to market the program around lower monthly payments. But a lower payment doesn’t make the device cheaper. Customers who return it pay for temporary use, while those who want to keep it will still owe its remaining value.
There is also a problem: AppleCare is apparently not included.
Apple’s current iPhone Upgrade Program spreads the combined cost of an iPhone and AppleCare Plus with theft and loss over 24 interest-free payments. Customers can upgrade after making the equivalent of 12 payments and trading in their current phone.
Apple reportedly plans to stop accepting new signups for this program and its standard iPhone financing once Apple Upgrade launches. Customers who want coverage will need to purchase AppleCare separately, so the advertised payment will not reflect their entire monthly cost.
And not all devices would be eligible either. The iPhone 16, Apple Watch SE, entry-level iPad and MacBook Neo would be excluded, along with business and educational purchases. This means that the program’s lower payments would primarily help Apple sell its most expensive hardware, not make its cheaper products more accessible.
Apple has not officially announced the program. CNET has contacted Apple and Klarna for comment.
With over a decade of experience, Nelson covers Apple and Google and writes about iPhone and Android features, privacy and security settings, and much more. See full bio