Apple Retires iPhone Upgrade Program for Klarna-Backed Leases

[C7 POWER]

For those who are currently upgrading their phones, this is pretty simple. The email I got stated, as in the screenshot below, that once you’ve made 12 payments, which for me usually coincides with the release of the new phones, you can order one choosing the upgrade lease as the payment method. You will complete a lease application. Then return the phone with their return kit that will be shipped to you. Once they have it your loan will be closed. If you haven’t made 12 payments at that time you can include and pay that balance.

This seems identical to the current method except for completing the lease agreement. Everything else is what I’ve been doing with the yearly upgrades. The other additional step would be picking an AppleCare plan, or not.

View attachment 2648507

Its not the same, this is soley about ending the CURRENT Program, the new one you will have to pay a fee if you choose to upgrade, especially if you do anything more than a 12 month term.

 

[C7 POWER]

Apple just sent emails to everyone on the IUP if you have made at least 12 payments on the IUP you can turn your device in right now and they will close the loan and you pay nothing or you can make the 24 payment and own the device.

Yeah when your ready to upgrade to a new phone, you cant just end the 24 month because you want to. Re read the email that WE all received

 

[Cayden]

When you signed up for iUP you paid the taxes up front! This new plan the taxes are in the monthly payments hence the difference in cost...........

Not according to the fine print. Taxes are not included in the $63.98 price:

 

[macduke]

Surprised to see the Vision Pro not on the program, that would have been a good way to get them in more people’s hands.

Because Apple is killing the Vision Pro next year, and replacing it with their glasses product which will be announced at WWDC 27, or if the UI/UX are similar enough, a September/October event.

 

[Tyler.Schmaltz]

Yeah when your ready to upgrade to a new phone, you cant just end the 24 month because you want to. Re read the email that WE all received

"If you’ve been in the program for at least six months, you’ll need to make the equivalent of 12 payments in order to get a new iPhone and close out your iPhone Upgrade Program loan. Once you’ve made 12 payments, you can lease with our new program, Apple Upgrade; shop the latest carrier deals; finance with Apple; or buy with a one-time payment."

Seems pretty cut and dry make at least 12 payments and then give apple the phone back and you're done. If you want to keep/own the phone make the last 12 payments.

 

[neuropsychguy]

I bet most people won't do that though. They either won't be able to do the large payment at the end or choose not to, thus keep them in a never ending cycle of monthly payments which will prevent them from ever getting ahead.

That's a significant downside to something like this being offered. If people are stuck in a cycle like that, hopefully they will learn how to manage their money. Some people never learn but others do and break the cycle.

 

[STOCK411]

"If you’ve been in the program for at least six months, you’ll need to make the equivalent of 12 payments in order to get a new iPhone and close out your iPhone Upgrade Program loan. Once you’ve made 12 payments, you can lease with our new program, Apple Upgrade; shop the latest carrier deals; finance with Apple; or buy with a one-time payment."

Seems pretty cut and dry make at least 12 payments and then give apple the phone back and you're done. If you want to keep/own the phone make the last 12 payments.

which is how the program worked to begin with when you wanted to upgrade

 

[HylianKnight]

They’re robbing you of your phones trade in value.

The absolute cheapest way to get iPhones nowadays is to keep them about 3 years and do the carrier promotions.

We’ve had ATT for 20 years. I’m always looking to see if anyone can beat our monthly rate but no one can.

We pay about $40 per month per phone for the top tier plan, and every 3 years I can trade in a phone for $1000 or even $1100 sometimes. It makes the new phone net cost to me about $200 over 3 years. No interest paid.

It’s really the best “value” there is.

Yeah, unless you loathe AT&T the way I do.

 

[neuropsychguy]

No, your speculation doesn't agree with the terms of this lease from Apple.



Emphasis mine.

Compared to carrier financing, you have a balloon payment at the end of the lease called a "purchase fee". That Purchase Fee doesn't change during the lease term. Markedly worse than the carrier financing deal I posted.

Apple will roll "negative equity" into your lease payment and etc. Which is insidious and nasty.

For carrier financing, I'd owe only the remaining balance. Not a fixed purchase price that is the same if I'm on the first lease payment or the last one. Meaning, you're ALWAYS staring down the hefty fee even if the iPhone is worth much less at that point.

Nasty.

It sounds like this isn't for you. That's fine, but your understanding of the terms is not correct. If I could be less blunt I would, but Apple specifically says this:

"Will I pay more than the full price of the device?"

​

"No. If you decide to upgrade or return your device at the end of your lease term, the total of your lease payments you made will be less than the full list price of the device at lease signing (excluding tax and any damage fees). If you decide to buy the device, the purchase option fee is the list price minus any lease payments you’ve made minus any remaining discounts or trade-in credit. (excluding tax and any damage fees)."

What does that mean?

Apple explicitly states that the purchase-option fee is the original list price minus the lease payments you have already made, as well as any applicable remaining discounts or trade-in credit. In other words, the purchase fee declines as you make payments; it is not the same “hefty fixed purchase price” after payment 24 that it was after payment one. If you ultimately buy the device, Apple says the lease payments plus the purchase fee will not exceed the original list price, excluding taxes and possible damage fees.

It works like this. iPhone 17 Pro = $1100 up front (we'll ignore taxes now). You can lease it for 24 months for $32 / month. At the end of the 24 months you will have paid $768. If you opt to buy it (the "purchase fee"), you will need to pay $332 (1100-768). Again, we are ignoring taxes but you will pay those either way (up front or at the end, likely on the whole device price).

Apple also does not “roll negative equity” into the next lease. At the normal end of the term, you return the old device, close that lease, and separately apply for a new lease. There is no negative equity because you do not own the returned device and are not financing an underwater trade-in. If you buy the phone and then trade it in, you are welcome to do that, but that's as much "negative equity" as buying the phone for $1100 two years prior and then trading it in for a new one.

There are legitimate criticisms: you do not own the device after the scheduled payments (unless you buy at the end), early termination requires paying all remaining lease payments (this is harsh, but generally the case with leases), and damage fees may apply (if it's going to be an issue, get Apple Care+). But describing the purchase fee as fixed regardless of how many payments have been made -- and claiming Apple rolls negative equity into the next lease -- is simply a misreading of the terms.

 

[Ethosik]

For those without the means to purchase their dream Mac, a no fee/interest payment plan is perfect. This seems like a great option.

If you're religiously against having something you can't afford to pay for up front, this isn't for you. Seems pretty clear. Don't judge others.

But it seems like a win-win for many. It's very similar to buying a MacBook at BestBuy with their 24- or 36-month no interest plan which allows one to pay off a purchase over time for free.

I can drop $10K+ on a new Mac Studio today if I wanted. But I prefer the 0% installments from the Apple Card instead as I can invest that 10k and make more from it. Not everyone does this though.

 

[Ethosik]

Why do this instead of the Apple Card installments? See my post above as to why I use it.

 

[neuropsychguy]

Why do this instead of the Apple Card installments? See my post above as to why I use it.

You can do this over 2-3 years. Apple Card is over 12 months.

 

[LogicalApex]

Your reading of it is incorrect. If I could be less blunt I would, but Apple specifically says this:

"Will I pay more than the full price of the device?"

​

"No. If you decide to upgrade or return your device at the end of your lease term, the total of your lease payments you made will be less than the full list price of the device at lease signing (excluding tax and any damage fees). If you decide to buy the device, the purchase option fee is the list price minus any lease payments you’ve made minus any remaining discounts or trade-in credit. (excluding tax and any damage fees)."

What does that mean?

Apple explicitly states that the purchase-option fee is the original list price minus the lease payments you have already made, as well as any applicable remaining discounts or trade-in credit. In other words, the purchase fee declines as you make payments; it is not the same “hefty fixed purchase price” after payment 24 that it was after payment one. If you ultimately buy the device, Apple says the lease payments plus the purchase fee will not exceed the original list price, excluding taxes and possible damage fees.

It works like this. iPhone 17 Pro = $1100 up front (we'll ignore taxes now). You can lease it for 24 months for $32 / month. At the end of the 24 months you will have paid $768. If you opt to buy it (the "purchase fee"), you will need to pay $332 (1100-768). Again, we are ignoring taxes but you will pay those either way (up front or at the end, likely on the whole device price).


Apple also does not “roll negative equity” into the next lease. At the normal end of the term, you return the old device, close that lease, and separately apply for a new lease. There is no negative equity because you do not own the returned device and are not financing an underwater trade-in. If you buy the phone and then trade it in, you are welcome to do that, but that's as much "negative equity" as buying the phone for $1100 two years prior and then trading it in for a new one.

There are legitimate criticisms: you do not own the device after the scheduled payments (unless you buy at the end), early termination requires paying all remaining lease payments [this is harsh, but generally the case with leases], and damage fees may apply (if it's going to be an issue, get Apple Care+). But describing the purchase fee as fixed regardless of how many payments have been made -- and claiming Apple rolls negative equity into the next lease -- is simply a misreading of the terms.

It sounds like this isn't for you. That's fine, but it's not at all like what you're reading it as.

I pasted the text directly from the bottom of that page in the legalize at the bottom. It is what Apple specifically states in those terms. They specifically state you can incur significant fees and that you have to pay fees to get out from under this. They also don't, in those terms, confirm that turning in a device for a new lease would wipe out any remaining balance on the lease (such as a trade in value for that iPhone being lower than your remaining balance).

I don't trust any of their plain language marketing blurbs further up on the page as they are allowed to be inaccurate in those areas... A court would tell you "only the contract matters, not the marketing blurb, when they conflict".

But yes, the program isn't for me! My carrier, T-Mobile, would result in a $0/m payment and a device I own at the end. So, yes, $0 is hard to beat. Irrespective of my overall disdain for this.

 

[C7 POWER]

So there is no true answer on the upgrade process. So lets say you do the 24 months like we do in the current program we are enrolled into, We know at the 12th month we can upgrade at no fee. But under this new plan, it states the below:

1. Depending on how many months are left on your lease terms, the fee may be substantial.

So where does it tell us what the time frame is? Is it after 12 payments you can upgrade without a fee like we would on the Apple Upgrade Program that they just phased out?

How is it Apple does not give clear information on this process? We all need to know this due to September is coming quickly.

 

[ant the ninja]

So there is no true answer on the upgrade process. So lets say you do the 24 months like we do in the current program we are enrolled into, We know at the 12th month we can upgrade at no fee. But under this new plan, it states the below:

1. Depending on how many months are left on your lease terms, the fee may be substantial.

So where does it tell us what the time frame is? Is it after 12 payments you can upgrade without a fee like we would on the Apple Upgrade Program that they just phased out?

How is it Apple does not give clear information on this process? We all need to know this due to September is coming quickly.

Basically everything I’ve read has stated the same.

If you choose the 24 month plan, you can upgrade at 12 months BUT you need to pay the remaining 12 payments (or some fee) to upgrade. Not sure why anyone would do this.

Choosing the 12 month option operates exactly as our current iUP does. Make 12 payments and upgrade.

The only difference between the two is that with iUP, they were all 24 months with the option to upgrade at 12 months with no fee.

 

[platinumaqua]

Meh no just no... just buy

I agree. Cell phones and computers aren't that expensive to worth the effort to do payments on.

Then again, I don't get upgrade FOMO and I am ok with using something for 5+ years

 

[sjc83]

So looks if you have Spectrum Mobile, this wont work ?

 

[nateo200]

So looks if you have Spectrum Mobile, this wont work ?

Might be able to start the lease on Verizon or T-Mobile then switch to Spectrum after a month.

 

[beermode]

It absolutely is. The perspective of many here is that "I can easily afford to spend $5000 on a MacBook and if you can't then you're a peasant and financially struggling". Sounds like entitlement to me.

It'd be nice if people just discussed the Upgrade plan instead of feeling the need to "financially educate" people.

Nobody needs a 5k laptop. Especially ones that can't afford it. Sounds like you are rationalizing poor emotional based decisions in your life and lash out at others for it.

 

[beermode]

Ah yes, let's just take credit away from poor people so only the rich can have nice things. Nobody is holding a gun to their heads and saying "you have to buy this!" It's a decision people make for themselves.

It's predatory dude. Just like gambling.

 

[Ethrem]

It's predatory dude. Just like gambling.

Everything in finance is predatory. There are winners and losers. Credit is no different.

 

[beermode]

Everything in finance is predatory. There are winners and losers. Credit is no different.

Klarna soley exists for people that blew through their credit card limit.
They also have a history of getting you off of good standing for dubious reasons, placing people form the promotional APR into high interest pay offs.

 

[Ethrem]

Klarna soley exists for people that blew through their credit card limit.
They also have a history of getting you off of good standing for dubious reasons, placing people form the promotional APR into high interest pay offs.

This program is not structured to allow any of that. The worst Apple will let them do is make you have to pay the rest of the device off after three missed payments. No late fees, no interest, never paying more than the purchase price unless you don't take care of the device.