Apple launches Upgrade leasing program with Klarna

Apple is introducing a new leasing program, called Apple Upgrade, in partnership with buy-now-pay-later service Klarna, the company announced Tuesday. The program lets eligible customers pay for Apple devices in monthly installments and is available for the iPhone, Apple Watch, Mac, and iPad through the Apple Store online, the Apple Store app, and Apple Store locations in the United States.

Leasing prices start at $17.99 a month for iPhone, $11.99 for Apple Watch, $24.99 for Mac, and $11.99 for iPad. Apple Upgrade offers one- and two-year leasing options for iPhone and Apple Watch, and two- and three-year options for Mac and iPad. At the end of the lease term, Apple says customers can upgrade to the latest generation of their device, buy their current device with a one-time payment, or return it and exit the program. Customers manage their lease directly in the Klarna app, where they can view their billing schedule and track remaining payments.

The rollout comes as Apple has been struggling with supply-chain issues tied to “RAMageddon,” the industry-wide shortage of memory chips that is driving up hardware prices. Apple recently announced price hikes for its Mac and iPad lineups, sparing the iPhone for now, and the new Upgrade program looks like Apple’s answer to making those higher prices more manageable for consumers. With Upgrade’s launch, Apple is discontinuing its existing in-house financing and installment programs in the U.S., including the iPhone Upgrade Program and iPhone Payments.

The official launch follows a report from Bloomberg’s Mark Gurman last week that revealed Apple was preparing a lease-to-own program for its devices. Apple says customers who enroll in Apple Upgrade can lower their monthly lease payments by trading in their existing device through its Apple Trade In program, and can earn 3% Daily Cash back when using Apple Card to make lease payments.

Why it matters

Rolling out a financing program just as memory-chip shortages push up Mac and iPad prices suggests Apple sees monthly leasing, rather than price cuts, as its near-term answer to affordability pressure — with Klarna, not an in-house program, now handling the billing relationship with customers.