Apple Retires iPhone Upgrade Program for Klarna-Backed Leases

[jbachandouris]

They only show estimated price for the Pro not the Pro Max. Pretty sure it’ll be more than $1099 for the Pro Max. Also the price for AppleCare plus needs to be factored in. Only a fool would finance without it. My guess is I’ll pay close to the same as the normal IUP I’m already on. $61 per month for the 256GB 17 Pro Max.

My guess is Citizens Bank didn’t want this anymore or Klarna offered to pay Apple more. Sounds like the new CEO is just changing things for the sake of changing things. Not a good start. And we thought Tim was bad.

 

[neuropsychguy]

You are both right and wrong.
Yes the math is correct. Yes you financially gain by leasing.
But there is also psychology. With an attractive monthly price instead of a difficult up front payment, your brain is more likely to spend money on this product, versus simply keeping your old phone for longer.

That is the goal of these programs. To encourage you to spend. Personal finance is more psychology than math.

I understand that, which is why I only recommend this for people who can pay up front and were already planning to do so. There are a few other situations where it can make sense (someone who doesn’t have the money up front but who is planning to use the device to learn a new skill or make money and improve their employment and finances).

 

[Johnny907]

“You will own NOTHING and you’ll LIKE it!!”

 

[HylianKnight]

I did not know that! I thought Apple was using some owned subsidiary for financing similar to what the auto manufacturers do for financing and loans through their dealership networks. Well, I got nothing then...Klarna probably just wanted the deal more.

Yeah, or I’m thinking Citizen wanted out. The former is probably the truth of it though. I believe Apple when they claim they wanted to provide more ways for people to purchase more products (why wouldn’t they), and Klarna was probably more willing to take on the risk than Citizen. I’m sure we will eventually learn more about how this came to be.

 

[jbachandouris]

If I am reading this right, I'm not going to be able to trade in my current device on IUP this year and get a new iPhone, without paying mine off or opening a completely separate lease (making two payments for two devices). That feels like a rug out from under me.

Are you not understanding? You ALWAYS pay your phone off by handing over the old device and paying off the second year. Nothing has changed except the including of Apple Care + not being required which is not smart. It’s going to cause a big mess for them.

 

[DEMinSoCAL]

Own my vehicle outright and while I have ~12 house payments left, I could pay it off from my savings account if I really wanted to.

I think he meant originally. Did you save up and buy your car outright? How many years was your mortgage?

The point is, everybody makes payments on the things they can't afford to pay for up-front. This is even better because the pay-over-time is free.

 

[HylianKnight]

They only show estimated price for the Pro not the Pro Max. Pretty sure it’ll be more than $1099 for the Pro Max. Also the price for AppleCare plus needs to be factored in. Only a fool would finance without it. My guess is I’ll pay close to the same as the normal IUP I’m already on. $61 per month for the 256GB 17 Pro Max.

My guess is Citizens Bank didn’t want this anymore or Klarna offered to pay Apple more. Sounds like the new CEO is just changing things for the sake of changing things. Not a good start. And we thought Tim was bad.

I don’t think this was a quick decision by the new CEO. These types of deals and negotiations take months to years. I bet they both bid on it, but in the end, Klarna was willing to accept more risk than Citizen wanted

 

[jbachandouris]

“You will own NOTHING and you’ll LIKE it!!”

Been living under a rock? Not sure about other countries but that’s been the US for many years.

 

[Attirex]

If you are making payments on a phone, you are doing life wrong.

 

[thebellnd]

What I think is happening is Klarna buy the devices upfront from Apple, at a wholesale price. This allows Klarna to act as the leasing provider who own the leased device.

Because Klarna is paying below retail for every unit, they are guaranteed to make a profit. Even if you settle the difference between lease and the retail price at the end of the agreement, they've made money on that sale. The customer pays no interest.

I expect Apple earns a proportion of the profit at the end of each lease, on top of the advanced payments from Klarna. Apple also collects collects payments for AppleCare+, and surely gets a cut on carrier deals - too (revenue not shared with Klarna, because they are not part of the financing deal).

 

[DEMinSoCAL]

“You will own NOTHING and you’ll LIKE it!!”

You will DIE with nothing afterwards. What's your point?

 

[jlc1978]

Or you can purchase it for the price difference at the end of the contract. That way you can own it and be happy (or not) with it.

Yes, that's typical of any lease; it essentially a loan with a ballon payment.

Factoring in inflation and potential investment/interest returns, you can come out ahead rather than buying up front. It's basically a 0% interest rate loan.

Leases typically aren't a zero interest rate loan; the interest rate is backed into the lease payment and payment at the end. Apple's plan looks like it doesn't result in you paying more for the device than if you paid upfront, and is simply kicking back some of the profit to Klarna. This seems like a way to juice sales by making it easer to get an Apple product.

A lot depends on what the residual value used to set the monthly payments. If it is high, then leasing and returning can be a good deal because you got a cheap rate and avoided a lot of the depreciation. Too low and you paid more monthly but can make it up by buying out the lease and reselling / trading in the device. People did that with leased phones when their payoff on the "upgrade every two years" plan was less than Apple's trade in value, so you payoff phone and get higher trade in value.

Leasing does help with cash flow since you avoid a large upfront payment and may have tax advantages for a small businees; plus it makes it easy to get the lates device as your needs grow.

 

[ClaraStahlbaum]

Honestly, this new Upgrade Program really interests me. I am thinking that I could potentially lease an Imac and trade in my Mac Mini to lower the cost. Maybe I'd even do the same for an Iphone, but I have been interested in Android for a while, we'll see, but I am seriously considering leasing an Imac and trading in my current Mac Mini. I just bought my Iphone 17e so I should be good phone wise for a bit.

I am not really all that interested in "owning" my computer, since I owned my previous M2 Pro Mac Mini for a year and a half before selling it to get my current M4 Mac Mini in 2024.

 

[DEMinSoCAL]

Yes, that's typical of any lease; it essentially a loan with a ballon payment.




Leases typically aren't a zero interest rate loan; the interest rate is backed into the lease payment and ballon payment at the end. A lot depends on what the residual value used to set the monthly payments. If it is high, then leasing and returning can be a good deal because you got a cheap rate and avoided a lot of the depreciation. Too low and you paid more monthly but can make it up by buying out the lease and reselling / trading in the device. People did that with leased phones when their payoff on the "upgrade every two years" plan was less than Apple's trade in value, so you payoff phone and get higher trade in value.

Leasing does help with cash flow since you avoid a large upfront payment and may have tax advantages for a small businees; plus it makes it easy to get the lates device as your needs grow.

You seem to be contradicting yourself. Most leases do have a baked-in fee each payment, and that is the profit. So the total cost (down payment + total of payments) is MORE than the actual cost of the item. This plan, as has been clearly stated over and over, whether you pay upfront or over time, the net cost is the same.

 

[hovscorpion12]

I will say this (in my defense to all of this)

If you are someone who upgrades your products in 12-months or 24-months, a lease option can make sense. My reasoning is that if you truly wanted to “own” the product, you would use it until it breaks or fails”. Upgrading every year (to me) feels like a lease. Even though you paid full price, you’re still getting something brand new every year.

Same with cars. I can buy my $65,000 car in cash and buy a new one next year. Did I truly “own it”

 

[jbachandouris]

Honestly, this new Upgrade Program really interests me. I am thinking that I could potentially lease an Imac and trade in my Mac Mini to lower the cost. Maybe I'd even do the same for an Iphone, but I have been interested in Android for a while, we'll see, but I am seriously considering leasing an Imac and trading in my current Mac Mini. I just bought my Iphone 17e so I should be good phone wise for a bit.

I am not really all that interested in "owning" my computer, since I owned my previous M2 Pro Mac Mini for a year and a half before selling it to get my current M4 Mac Mini in 2024.

Personally I’m already financing my M5 and my iPad Pro cellular will be paid off this year. Carrier financing. Not upgrading either any time soon.

 

[Johnny907]

I think he meant originally. Did you save up and buy your car outright? How many years was your mortgage?

The point is, everybody makes payments on the things they can't afford to pay for up-front. This is even better because the pay-over-time is free.

Yeah except when I financed my truck I wasn’t then locked into driving on only certain roads.
If I’m financing a phone at a rate that high, I want access to ANY network I choose especially if I’m traveling abroad.

 

[PBG4 Dude]

I think he meant originally. Did you save up and buy your car outright? How many years was your mortgage?

The point is, everybody makes payments on the things they can't afford to pay for up-front. This is even better because the pay-over-time is free.

I bought my son’s and my vehicle outright (it helped it was the other person’s fault for the car wreck). I don’t think you can reasonably expect anyone who isn’t in the real estate business to buy houses for cash though.

 

[TruthAboveAllElse]

Apple doing the impossible - allowing you to rent the iPhone because it is so damn expensive now...don't fall for it guys!! save your $$$ and then buy it outright...these leases aren't worth it!!

Why? There’s no interest and you can buy at the end of the lease term if you want to keep it.

 

[Johnny907]

I will say this (in my defense to all of this)

If you are someone who upgrades your products in 12-months or 24-months, a lease option can make sense. My reasoning is that if you truly wanted to “own” the product, you would use it until it breaks or fails”. Upgrading every year (to me) feels like a lease. Even though you paid full price, you’re still getting something brand new every year.

Same with cars. I can buy my $65,000 car in cash and buy a new one next year. Did I truly “own it”

See my post above. Financing my truck didn’t restrict where or how I drive it.

 

[hovscorpion12]

I bought my son’s and my vehicle outright (it helped it was the other person’s fault for the car wreck). I don’t think you can reasonably expect anyone who isn’t in the real estate business to buy houses for cash though.

It’s funny. I’ve always been curious if your the type of person who wanted a 2.5M house and paid cash. I’d imagine there would be a whole “investigation” first. (If you know)

 

[CarAnalogy]

That is not what a contract means. If it is not pre-paid, then it is postpaid. Contract plans are completely different and have not existed with the 3 carriers in years.

I may be mistaken, I’ll check that out. Thanks for replying instead of just hitting disagree.

 

[DEMinSoCAL]

Yeah except when I financed my truck I wasn’t then locked into driving on only certain roads.
If I’m financing a phone at a rate that high, I want access to ANY network I choose especially if I’m traveling abroad.

You really seem confused. What high rate are you talking about and the phone you get is unlocked so you can do whatever you want when you travel abroad. Seems like you're just making excuses to hate this plan. Don't use it if you don't like it.

 

[CarAnalogy]

The total paid if purchasing at the end of the lease is 100% the same as as a regular purchase. So tell me, how is it silly to "expect" a balloon payment at the end of a lease when deciding to keep the device and pay the remainder as opposed to "expecting" a balloon payment immediately when you purchase outright?

I’m just saying why finance something for twelve bucks a month and then make one big payment of over $100. In that case may as well return it.

Maybe there’s a good reason for people to do this in some cases.

 

[FatLouie]

“If you’re leasing an iPhone, you’ll need to connect to AT&T, T-Mobile, or Verizon when you enroll. You can lease an iPad, Mac, or Apple Watch without a carrier connection.”

Fail.
Some of us don’t want your big three slobber fests Apple.

Yep. This is a dumba** move by Apple and certainly seems like collusion with the big 3 carrier. Why the hell would Apple even force customers into this position? I use Mint and am not going to play this game where I select a big 3 carrier, then drop it, and then move to Mint. Too much trouble.