Apple Retires iPhone Upgrade Program for Klarna-Backed Leases

[CarAnalogy]

LOL! I literally told you the same thing back on post #27 from you.

Perhaps the wording was confusing because a lot of people seemed to agree with me.

It still says you must choose one, and I want nothing to do with any of them. That's my real issue.

 

[jbachandouris]

I think in many ways, this plan is similar enough to the iUP for most. That said, there are some significant differences that should be clearly explained to people. The aspect I’m trying to determine is how best to add AppleCare+ moving forward

There’s an option to add it on. Still absolutely stupid not to make it mandatory. You buy or lease a car you need to have full coverage insurance. This should be no different.

 

[Dinozero]

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.

 

[neuropsychguy]

One more comment about this. An higher end MacBook Pro might be $5500 out the door (M5 Max with 18 core CPU and 64 GB of RAM). That's a significant cost. Financing through Apple over 12 months is $392 per month. It could instead be "leased" for $110 per month over 36 months. That would leave about $1500 left to buy it out at the end. $110 per month is much more manageable than almost $400/month, if you can swing the extra $1500 at the end.

If someone cannot afford to spend $5500 (after tax) on the computer, it's likely best that they do not buy or lease it. However, there are times (small business) when leasing will make sense, even if it's not bought at the end.

Other considerations. Macs will typically retain about 50% of their value over 3 years. Some data suggest they might retain around 40% value after 7 years, but other data suggests only about 20% value. It can depend on the machine and broader market conditions.

That $5500 spent on a high end MacBook Pro will work out to an effective price of $52 per month over a 7 year period, assuming you can sell it for 20% of its original value at the end. If you can't or don't sell it, that's an effective $66 per month. If you only keep it for 3 years and manage to sell it for 50% of your purchase price, that's effectively $76 per month. That makes the lease about 30% more expensive.

If holding the computer for only 3 years results, however, in only a 40% retention of value, that works out to an effective $92 per month after resale. The lease then is only a 17% premium. Or someone could then buy it at the end of the lease, keep it for 2 - 4+ more years, and would break even over time (unless purchasing a more expensive computer than they otherwise would have, which is one of the major risks with this plan).

 

[jib2]

“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.

Since you receive the phone unlocked (per Apple's detailed description), you can switch to another carrier immediately or at any time. Inconvenient, but not very restrictive.

 

[Ethrem]

“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.

Going through checkout, it seems that just like ACMI, you can choose T-Mobile when buying a Pro model, Air, or 17e, and it will not verify. When you get the phone you just have to skip the connect to T-Mobile step and tap the option that you didn't get the code. This has been a backdoor that those of us on MVNOs have used for years although the code thing is new this year, used to just be you attempt to skip the connection 3 times and it gives up.

Either you're rich or just don't understand you don't have to be "struggling financially" to not be comfortable spending over $3000 upfront for a computer. Sometimes I think many people here don't realize how most people live.

Yep. I've got a good chunk of money in savings but I would rather keep it there and finance things at 0%.

I used to keep my phones in immaculate condition and sell them every year to recoup what I could towards my next upgrade. It got to the point where it was too much of a hassle. Too many lowballers, people asking to trade something for it and on top of that ever increasing selling fees, insurance required for shipping, shipping and packing costs. This is what pushed me to the upgrade program and it has worked well for me in that respect for the last few years. I'll continue to use it for this reason.

You could also just trade in with Apple though. As an example, a 16 Pro Max traded in for a 17 Pro Max would get you $695, meaning you only paid an effective $404 for a year of usage.

I am wondering if people using carriers other than the big 3 are more likely to default on payments. I know there is always collections, but a lot of the time these situations are settled with a much lower payment amount than what is owed.

If people tend to default then they would usually have their credit in the toilet already so how are they going to get approved? I think it's more that the carriers threw a fit about Apple taking business from them.

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.

That works if you have 4 lines or more but otherwise postpaid is robbing you of anything you're saving. My plan with US Mobile costs me $32.50/mo for a single line and gives me postpaid priority data. Even Verizon's $30 a month Simplicity would cost me more since US Mobile includes taxes and fees in the plan pricing and Verizon does not.

One more comment about this. An higher end MacBook Pro might be $5500 out the door (M5 Max with 18 core CPU and 64 GB of RAM). That's a significant cost. Financing through Apple over 12 months is $392 per month. It could instead be "leased" for $110 per month over 36 months. That would leave about $1500 left to buy it out at the end. $110 per month is much more manageable than almost $400/month, if you can swing the extra $1500 at the end.

If someone cannot afford to spend $5500 (after tax) on the computer, it's likely best that they do not buy or lease it. However, there are times (small business) when leasing will make sense, even if it's not bought at the end.

Other considerations. Macs will typically retain about 50% of their value over 3 years. Some data suggest they might retain around 40% value after 7 years, but other data suggests only about 20% value. It can depend on the machine and broader market conditions.

That $5500 spent on a high end MacBook Pro will work out to an effective price of $52 per month over a 7 year period, assuming you can sell it for 20% of its original value at the end. If you can't or don't sell it, that's an effective $66 per month. If you only keep it for 3 years and manage to sell it for 50% of your purchase price, that's effectively $76 per month. That makes the lease about 30% more expensive.

If holding the computer for only 3 years results, however, in only a 40% retention of value, that works out to an effective $92 per month after resale. The lease then is only a 17% premium. Or someone could then buy it at the end of the lease, keep it for 2 - 4+ more years, and would break even over time (unless purchasing a more expensive computer than they otherwise would have, which is one of the major risks with this plan).

Resale is a pain though. Scammers everywhere. I would rather have the sure thing from Apple even if it costs me more.

For me, I'll probably use this program for my watch and maybe an iPad. For my phone, I'm honestly starting to think that flagships aren't worth it, so unless the trade in value for my 17 Pro Max is killer this year, I may well make the 17 Pro Max my first phone I keep for more than 2 years since... well, ever.

For my Mac... We will see. I have an M4 Max Studio so I don't expect to need to replace it any time soon.

 

[LogicalApex]

One more comment about this. An higher end MacBook Pro might be $5500 out the door (M5 Max with 18 core CPU and 64 GB of RAM). That's a significant cost. Financing through Apple over 12 months is $392 per month. It could instead be "leased" for $110 per month over 36 months. That would leave about $1500 left to buy it out at the end. $110 per month is much more manageable than almost $400/month, if you can swing the extra $1500 at the end.

If someone cannot afford to spend $5500 (after tax) on the computer, it's likely best that they do not buy or lease it. However, there are times (small business) when leasing will make sense, even if it's not bought at the end.

Other considerations. Macs will typically retain about 50% of their value over 3 years. Some data suggest they might retain around 40% value after 7 years, but other data suggests only about 20% value. It can depend on the machine and broader market conditions.

That $5500 spent on a high end MacBook Pro will work out to an effective price of $52 per month over a 7 year period, assuming you can sell it for 20% of its original value at the end. If you can't or don't sell it, that's an effective $66 per month. If you only keep it for 3 years and manage to sell it for 50% of your purchase price, that's effectively $76 per month. That makes the lease about 30% more expensive.

If holding the computer for only 3 years results, however, in only a 40% retention of value, that works out to an effective $92 per month after resale. The lease then is only a 17% premium. Or someone could then buy it at the end of the lease, keep it for 2 - 4+ more years, and would break even over time (unless purchasing a more expensive computer than they otherwise would have, which is one of the major risks with this plan).

Leasing a computer or phone just seems silly to me since you don't own the device.

At least carrier financing on the phone has you owning it at the end! They are also $0 interest deals.

I don't see how this lease is good for an Apple customer at all... It comes off as shady as the furniture rental shops. A low I wouldn't expect Apple to stoop to.

Business leasing I can understand. As the business is typically paying for extremely fast turn around time on repairs and the like, but consumers... This makes no sense.

 

[neuropsychguy]

Leasing a computer or phone just seems silly to me since you don't own the device.

At least carrier financing on the phone has you owning it at the end! They are also $0 interest deals.

I don't see how this lease is good for an Apple customer at all... It comes off as shady as the furniture rental shops. A low I wouldn't expect Apple to stoop to.

Business leasing I can understand. As the business is typically paying for extremely fast turn around time on repairs and the like, but consumers... This makes no sense.

You can buy it at the end if you choose to do so. The total cost is the same as buying it outright.

For example, the $2000 14" MBP costs $2000+tax if you buy it. If you opt for "leasing" you pay $39 / month for 26 months ($1404) and then can buy it for $600 (+ tax). Total cost over 3 years is exactly the same (well, technically not because of inflation -- leases get less expensive over time because of inflation).

 

[Bauer24]

“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.

Just another megacorp helping other megacorps keep their stranglehold on the market. Just more greed from Apple.

 

[LogicalApex]

Resale is a pain though. Scammers everywhere. I would rather have the sure thing from Apple even if it costs me more.

For me, I'll probably use this program for my watch and maybe an iPad. For my phone, I'm honestly starting to think that flagships aren't worth it, so unless the trade in value for my 17 Pro Max is killer this year, I may well make the 17 Pro Max my first phone I keep for more than 2 years since... well, ever.

How is this any better than carrier financing? Which is also 0% interest.

I can see how it is worse. You don't own the device at all with this plan. So you can't use it for a trade-in at a carrier or anything until you satisfy the balloon payment.

For comparison, if I trade in an iPhone 15 Pro to T-Mobile today I end up with a 0% interest loan and $0/m out of pocket. That's cheaper than whatever this "lease" is and I still own my phone when this is done. All doable directly at Apple.

If I walk away early the "balloon payment" is whatever is left. So I still bank the T-Mobile credits. Said another way, if I left T-Mobile with 1 month left on the carrier deal I'd only owe T-Mobile $32.46. Not some bizarre "final purchase price" like this idiotic lease.

 

[Pedersenko]

Klarna should be made illegal.
Don’t let people buy what they can’t afford
It’s a robbery to put them on credit needle

 

[Ethrem]

How is this any better than carrier financing? Which is also 0% interest.

I can see how it is worse. You don't own the device at all with this plan. So you can't use it for a trade-in at a carrier or anything until you satisfy the balloon payment.

For comparison, if I trade in an iPhone 15 Pro to T-Mobile today I end up with a 0% interest loan and $0/m out of pocket. That's cheaper than whatever this "lease" is and I still own my phone when this is done. All doable directly at Apple.

If I walk away early the "balloon payment" is whatever is left. So I still bank the T-Mobile credits. Said another way, if I left T-Mobile with 1 month left on the carrier deal I'd only owe T-Mobile $32.46. Not some bizarre "final purchase price" like this idiotic lease.

View attachment 2648482

My prepaid plan costs me $32.50/mo. Going to a postpaid carrier on a premium plan to get these deals would cost me significantly more and negate any savings.

I have my 17 Pro Max on ACMI at $49.95 right now. That puts my total monthly cost at $82.45. The Experience Beyond plan in this example here alone is $100 a month, not to mention that my device would be locked to T-Mobile for 24 months, which is unacceptable for someone like me who tends to use multiple networks.

As of today, it seems that this Klarna deal works just like ACMI where you can choose T-Mobile as your carrier and, if you're buying a 17e, Air, or Pro/Max, you can check out and use it on an MVNO anyway since the phone comes unlocked.

 

[neuropsychguy]

How is this any better than carrier financing? Which is also 0% interest.

I can see how it is worse. You don't own the device at all with this plan. So you can't use it for a trade-in at a carrier or anything until you satisfy the balloon payment.

For comparison, if I trade in an iPhone 15 Pro to T-Mobile today I end up with a 0% interest loan and $0/m out of pocket. That's cheaper than whatever this "lease" is and I still own my phone when this is done. All doable directly at Apple.

If I walk away early the "balloon payment" is whatever is left. So I still bank the T-Mobile credits. Said another way, if I left T-Mobile with 1 month left on the carrier deal I'd only owe T-Mobile $32.46. Not some bizarre "final purchase price" like this idiotic lease.

View attachment 2648482

In your case, it might make sense to finance through the carrier. But because there is still the option with the lease to have end-of-term buyout equals the original retail price, it cancels out the downside of not owning it. It essentially acts as a 0% interest loan with an escape hatch (do not have to pay full price for the device [but in that case you really only leased it]). With standard carrier financing, you are fully committed to buying the phone from day one. If you want to upgrade early, you also have to pay off the remaining balance. With the lease, you get the exact same financial outcome if you choose to keep it, but you also retain the option to just hand it back and walk away or upgrade without ever having to shell out a lump sum to clear a finance balance. You get the flexibility of a lease with the exact same cost-to-own as financing.

It's just another option that can be almost exactly the same as carrier financing if someone opts to buy at the end.

Another benefit is this is not carrier locked, unlike carrier financed phones. If you're not going to change providers, it doesn't really matter -- you can finance through the carrier or through Apple/Klarna -- but if you decided you wanted to switch to a cheaper provider in one year, you can easily do that, without having to pay off the rest of your carrier-financed device and try to get them to unlock it.

 

[Ethrem]

Klarna should be made illegal.
Don’t let people buy what they can’t afford
It’s a robbery to put them on credit needle

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.

 

[jdawgnoonan]

Happy to still be able to use my Apple Card for financing.

 

[C7 POWER]

So correct me if I am wrong, but now under this new plan, those of us who di the annual upgrade through what WAS the 1UP Program, now the only way to trade in annually is if we select the 12 month option which will force the payment to sky rocket vs doing the 0% for 24 months but at 12 months we qualified to turn the old one in and get a new one without any fees. So now if we select 24 months, we would have to pay the additional 12 months up front to turn it in and upgrade?

 

[Ethrem]

In your case, it might make sense to finance through the carrier. But because there is still the option with the lease to have end-of-term buyout equals the original retail price, it cancels out the downside of not owning it. It essentially acts as a 0% interest loan with an escape hatch (do not have to pay full price for the device [but in that case you really only leased it]). With standard carrier financing, you are fully committed to buying the phone from day one. If you want to upgrade early, you also have to pay off the remaining balance. With the lease, you get the exact same financial outcome if you choose to keep it, but you also retain the option to just hand it back and walk away or upgrade without ever having to shell out a lump sum to clear a finance balance. You get the flexibility of a lease with the exact same cost-to-own as financing.

It's just another option that can be almost exactly the same as carrier financing if someone opts to buy at the end.

Another benefit is this is not carrier locked, unlike carrier financed phones. If you're not going to change providers, it doesn't really matter -- you can finance through the carrier or through Apple/Klarna -- but if you decided you wanted to switch to a cheaper provider in one year, you can easily do that, without having to pay off the rest of your carrier-financed device and try to get them to unlock it.

You don't always have to pay in full with carrier financing. Each carrier has an early upgrade program that wipes out the remaining balance.

 

[jdawgnoonan]

"You will own nothing and be happy with it." - literally every corporation including Apple now.

I enjoy owning stuff too, however, it is a fantasy that I really “Own” anything at all. I “Own” a house. But I am 53 years old with no kids….I don’t “Own” it. Property taxes alone are a pretty good indicator that I rent the house. My phones, guitars, bikes, etc…. I “Own” them as far as that goes. My ownership of anything is only measurable by my ability to sell what I own.

 

[Ethrem]

So correct me if I am wrong, but now under this new plan, those of us who di the annual upgrade through what WAS the 1UP Program, now the only way to trade in annually is if we select the 12 month option which will force the payment to sky rocket vs doing the 0% for 24 months but at 12 months we qualified to turn the old one in and get a new one without any fees. So now if we select 24 months, we would have to pay the additional 12 months up front to turn it in and upgrade?

I'm not seeing anywhere what the fee is for early upgrades so this is a question mark right now.

 

[ab2c4]

You can buy it at the end if you choose to do so. The total cost is the same as buying it outright.

For example, the $2000 14" MBP costs $2000+tax if you buy it. If you opt for "leasing" you pay $39 / month for 26 months ($1404) and then can buy it for $600 (+ tax). Total cost over 3 years is exactly the same (well, technically not because of inflation -- leases get less expensive over time because of inflation).

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.

 

[Cayden]

Since no official pricing has been announced your argument holds little weight. I’m paying the same and I just assumed at least $3 more already.

You can go to the Apple Store right now and check the prices. If you got a 256 GB 17 Pro Max with the Apple Upgrade program today, it would cost $49.99 a month. AppleCare is $13.99 a month, for a total of $63.98 a month, plus tax. My after tax cost today for that exact same thing with iUP is $61. So it’s pretty easy to verify it costs most today than it did with the iUP yesterday, and that’s with the phone prices staying exactly the same. My other comment was simply stating the gap will be even larger IF phone prices go up, while also showing monthly payment costs have already gone up without a price increase on the phone.

 

[abracadaver]

It appears that you will have to have a Klarna account to manage the lease... don't love that. So, it sounds like if I want to "get out" of the current iPhone Upgrade program, I need to either switch over to the Apple Upgrade program (defeating the purpose), or keep paying my Citizens Bank loan for the remainder.

Wonder what sort of trade-in credit I'd get for a 17 Pro Max in 2027? 😅

 

[TruthAboveAllElse]

I’m wondering if Apple is doing this because the phone companies perform their own credit checks before offering post-paid accounts and this works like a secondary credit worthiness check?

Doubtful. Carriers use monthly payment patterns to qualify you as well once you’re on the plan. You could have signed up years ago. My credit is not great, it’s very easy for me to finance a phone through my carrier through.

Unless Apple uses it to qualify *more* people who wouldn’t otherwise qualify.

 

[LogicalApex]

In your case, it might make sense to finance through the carrier. But because there is still the option with the lease to have end-of-term buyout equals the original retail price, it cancels out the downside of not owning it. It essentially acts as a 0% interest loan with an escape hatch (do not have to pay full price for the device [but in that case you really only leased it]). With standard carrier financing, you are fully committed to buying the phone from day one. If you want to upgrade early, you also have to pay off the remaining balance. With the lease, you get the exact same financial outcome if you choose to keep it, but you also retain the option to just hand it back and walk away or upgrade without ever having to shell out a lump sum to clear a finance balance. You get the flexibility of a lease with the exact same cost-to-own as financing.

It's just another option that can be almost exactly the same as carrier financing if someone opts to buy at the end.

Another benefit is this is not carrier locked, unlike carrier financed phones. If you're not going to change providers, it doesn't really matter -- you can finance through the carrier or through Apple/Klarna -- but if you decided you wanted to switch to a cheaper provider in one year, you can easily do that, without having to pay off the rest of your carrier-financed device and try to get them to unlock it.

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

Terminating your Apple Upgrade Lease: Closing your lease and returning your device terminates your lease. You may incur substantial fees if you terminate your lease before the end of your initial lease term. You may have the option to upgrade to a new device by entering into a new lease agreement and returning your prior device. If you upgrade, your new monthly payments may be greater than your prior monthly payments. If you do not upgrade, terminate your lease, or purchase your device by the end of the initial lease term, the lease will convert to a month-to-month lease for up to six months. Your monthly payments may increase during the month-to-month periods. If you take no action at the end of your extension period, you will be charged the purchase fee under your lease. You will not own your device at the end of your lease, unless you pay the purchase fee. Insurance is not included in your lease, and you may incur damage fees if the device is lost, stolen, or not returned in the condition required by the lease.

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.

 

[Ethrem]

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.

The hefty fee is just the difference between the lease payments and the purchase price so it's not like you're paying more than you would buying it outright regardless.