Apple Upgrade: 20 Things to Know Before Leasing an iPhone, iPad, or Mac

[NicosAccount]

The Apple revenue incentive is simple, they get the full MSRP retail sale (less kick-back) when the customer walks out of the store with the new phone. Klarna is financing the sale.

I'm still trying to understand Klarna's revenue/profit model. Are they hoping people cancel contracts early and send back the phone sooner? It feels like Klarna is betting on the resale value of the used phone market. Or will they will be aggressively charging "damage" fees for those without AC+?

that plus they could also be getting a small cut from apple for every device financed, they are bringing apple more sales from people who couldnt necessarily afford a device outright if the service wasnt available.

 

[pancakedrawer]

So many people are missing the point of this.
Apple is essentially financing the purchase for you. Technically with inflation, its cheaper to lease the phone than it is to buy outright at the start.
There will be plenty of businesses that take advantage of this. Being able to pay monthly for something you get up front and on 0% interest is the dream.

 

[fwallenberg]

Outside of iPhone, most devices only allow 12 months on ACMI. That means much higher payments.

I pay ~$20 for a Spigen Tough Armor for every phone I buy and I've never broken one. I threw away AppleCare on three iPhones then stopped buying it and haven't regretted it.

I would hope that Apple will pressure them on allowing it for the Apple Card if they're advertising this benefit.

The replacement for iUP is the 12 month lease. Why? Because after a year on the 12 month lease you will have paid off ~50% of the device. Then you can either choose to upgrade and start a new lease, just like with iUP, or you can pay the rest of the 50% to keep it (the installments automatically convert to another 6 months if you don't pay off when the lease ends which will lower that lump sum).

Alternatively, once the lease is done, you can just return the device if you want out of the Apple ecosystem, where with iUP you would have been stuck for the other 50% of the device.

But the monthly payment for a 12 month lease is twice that of the iUP! How is that an equivalent deal? With the iUP I end up paying the equivalent monthly of a 24-month lease and then have a streamlined upgrade process (send it in and get a new one). The only thing that changes is the monthly on the new 24-month iUP.

The way it looks, to get the equivalent of the iUP you take a 24-month lease, pay it off after 12 months, sell your device and then buy a new one on a new Apple Upgrade program. There is a big disconnect in the new process (unless there is something here that I've missed).

 

[polaris20]

Completely disagree. It’s expensive insurance. I have cracked one iPhone screen in my life, and it was covered by my credit card (minus $50). Over the Apple devices I have owned I have saved the cost of several iPhones by not having AppleCare. I understand I will be unlucky from time to time but it more than comes out in the wash.

You're missing the context of the thread.

 

[polaris20]

iPhone 8 Plus, iPhone XS Max, iPhone 12 Pro Max, LG G8, Pixel 3 XL, OnePlus 9, Pixel 7 Pro, S23 Ultra, S24 Ultra, OnePlus 12, iPhone 16e, iPhone 16 Pro Max, and iPhone 17 Pro Max. All protected by Spigen Tough Armor. None of them have broken. I even chucked my 8 Plus off the second story balcony onto the tile floor below one night when I was drunk to demonstrate how good the case is to my roommate at the time and it was unscathed.

Cool. Still less than the more than 1000 I've dealt with then. Pardon me, while I still take your anecdote with a grain of salt. And again, I was referring more to MacBooks than phones, where the cost of replacing a screen is far more.

 

[polaris20]

The amount ive saved over the years from not buying any insurance (other than home, car and life), especially for random electronics more than makes up for the purchase of several new devices if i ever broke one (never happened but ive dropped them plenty). Plus you can add the interest you can earn on investments from money saved over time.

Insurance doesnt make financial sense for cheaper things unless youre breaking phones left and right. And if someone can barely affort a device, id argue they cant afford the luxury of insuring them on top so i dont see a scenario where it makes sense. The only one I see is for someone who has money and is just paying more for the perceived peace of mind regardless of the net gains or losses. Well i guess thats also what insurers are banking on, you can insure a 30$ purchase now its wild.

Missing the context of the thread.

 

[Ethrem]

But the monthly payment for a 12 month lease is twice that of the iUP! How is that an equivalent deal? With the iUP I end up paying the equivalent monthly of a 24-month lease and then have a streamlined upgrade process (send it in and get a new one). The only thing that changes is the monthly on the new 24-month iUP.

The way it looks, to get the equivalent of the iUP you take a 24-month lease, pay it off after 12 months, sell your device and then buy a new one on a new Apple Upgrade program. There is a big disconnect in the new process (unless there is something here that I've missed).

How do you figure the payment is twice as much? The 12 month lease term is right about exactly 50% of the device MSRP, just like on iUP. It's $49.95/mo to finance an $1199 17 Pro Max on ACMI for 24 months and $49.99/mo to lease for 12 months on AU, after which you can trade it in for a new device.

 

[Ethrem]

Cool. Still less than the more than 1000 I've dealt with then. Pardon me, while I still take your anecdote with a grain of salt.

You're clearly thinking of other Spigen cases or you're just making things up. The Tough Armors are just a step down from OtterBox Defenders. You can break the screen but the rest of it you would really have to put in some effort as they have both TPU and a hard shell. Recent ones even have padded corners and backs. I drop my phones all the time. If the cases sucked, I would have found out.

Regardless, I've saved so much money not buying insurance policies for these devices that even if I have to come out of pocket for a total loss, I'm still ahead monetarily.

 

[miiwtoo]

leasing an iPhone, are you fuc*** kiddin' me right,

 

[polaris20]

You're clearly thinking of other Spigen cases or you're just making things up. The Tough Armors are just a step down from OtterBox Defenders. You can break the screen but the rest of it you would really have to put in some effort as they have both TPU and a hard shell. Recent ones even have padded corners and backs.

No, I'm really not making things up. But I DGAF what you think really. I'm saying based on my experience of 15+ years of supporting iPhones, I hold a different viewpoint than you.

And again, as I've said multiple times, I was more referring to Macs than phones, in my initial post. But by all means, let's continue arguing.

 

[neuropsychguy]

What's the revenue incentive here for Apple?

It's retail pricing stretched out further with a lump sum at the end. They are making the same amount of money, but obviously Karna is getting a cut?

It’s likely people will lease/buy devices they were not going to buy before but now “can” with lower monthly payments. This goes for people potentially getting upgraded devices they wouldn’t otherwise get. Also, with laptops and phones, it makes a lot of sense to get AC+ (otherwise you risk repair fees for leased devices), which is high margin for Apple.

 

[LogicalApex]

You're still paying a repair, one way or another. A cracked/destroyed screen is far more than $75/year.

Are you breaking the screen often enough though? My last screen break was 4 years ago.

My iPhone 17 Pro would cost $120/y for Apple Care. For 4 years that’s $480 + $29 deductible. Paid directly it is $329 for the repair. Since my carrier allows me to trade in my iPhone in any condition for a full credit. If the crack is livable I can swap it for $0…

 

[Ethrem]

No, I'm really not making things up. But I DGAF what you think really. I'm saying based on my experience of 15+ years of supporting iPhones, I hold a different viewpoint than you.

And again, as I've said multiple times, I was more referring to Macs than phones, in my initial post. But by all means, let's continue arguing.

"Regardless, I've saved so much money not buying insurance policies for these devices that even if I have to come out of pocket for a total loss, I'm still ahead monetarily."

 

[polaris20]

And again, as I've said multiple times, I was more referring to Macs than phones, in my initial post. But by all means, let's continue arguing.

Are you breaking the screen often enough though? My last screen break was 4 years ago.

 

[polaris20]

"Regardless, I've saved so much money not buying insurance policies for these devices that even if I have to come out of pocket for a total loss, I'm still ahead monetarily."

Yup, let's keep it going! Maybe we can get a page of just you and I going back and forth. 🙄

 

[neuropsychguy]

The Apple revenue incentive is simple, they get the full MSRP retail sale (less kick-back) when the customer walks out of the store with the new phone. Klarna is financing the sale.

I'm still trying to understand Klarna's revenue/profit model. Are they hoping people cancel contracts early and send back the phone sooner? It feels like Klarna is betting on the resale value of the used phone market. Or will they will be aggressively charging "damage" fees for those without AC+?

Resale value for them at the end of the leases. People will pay about 70% of the value of the devices over the lease but they should retain about 50% or so of their value. It’s also possible Klarna gets them for a little less than retail price.

Other money can come from some fees or lease collections for people who drop paying, but most of the profits likely come from residual value.

 

[Ethrem]

Yup, let's keep it going! Maybe we can get a page of just you and I going back and forth. 🙄

To be fair, both of us edited our posts after submitting them. I'll drop it but I'm sure there are others who feel the same way about using a good case vs paying for AppleCare that see the savings.

 

[fwallenberg]

How do you figure the payment is twice as much? The 12 month lease term is right about exactly 50% of the device MSRP, just like on iUP. It's $49.95/mo to finance an $1199 17 Pro Max on ACMI for 24 months and $49.99/mo to lease for 12 months on AU, after which you can trade it in for a new device.

My bad. Was assuming the 12 month plan would leave it paid off after 12-months. If you end up with a 50% residual and can just send it in for a trade-in we're back in a roughly equivalent territory. Thanks.

 

[k1121j]

Think I’ll just buy the phone or do Apple Card payments at least I have a trade in value after. My 14 pro is still worth over 300.

 

[ricketysquire]

Uh, why? No one's forcing you to do this. It's another option. Now you can:

1. Buy it outright, in cash.
2. Use a credit card.
3. Use the Apple Card for 0% for those terms
4. Lease it.
5. Enter a raffle? 😀

Alternatively: Buy it used or open box. And slap AppleCare on it (or AppleCare+).

 

[ThailandToo]

Right, it's a lease. You pay $25/month for 36 months for an MBA. At the end, you turn it in, or pay the nice man $300.

Probably a lot more than $300. $700? Klarna charges like 30% sometimes when I see them offering on Amazon. The math isn’t adding up. It’s a financial company with investors. One more party to take part of people’s money. Sad to see Apple go the Amazon route. Even Amazon has their own payments like pay for five months or 12 months without any fees. Just only on select products. I mean Apple could easily create their own bank, but I guess they don’t want to be the ones sending people to collections?

 

[Ethrem]

Probably a lot more than $300. $700? Klarna charges like 30% sometimes when I see them offering on Amazon. The math isn’t adding up. It’s a financial company with investors. One more party to take part of people’s money. Sad to see Apple go the Amazon route. Even Amazon has their own payments like pay for five months or 12 months without any fees. Just only on select products. I mean Apple could easily create their own bank, but I guess they don’t want to be the ones sending people to collections?

The $1299 MBA is $24.99/mo for 36 months. After 36 months, you've paid $899.64, which leaves the buyout fee at $399.36.

Clearly Klarna is banking on the resale value of Apple products remaining high and/or Apple is kicking them some cash.

 

[Ethosik]

Yup. I have used my Apple Card with iPhone upgrade for years for the cash back. Guess that isn’t allowed anymore.

You can still do the Apple Card Installments, which sounds like I will continue to use that instead.

 

[Ethosik]

Outside of iPhone, most devices only allow 12 months on ACMI. That means much higher payments.

Wouldn't be the same amount compared with the Apple Card Installments that are 12 months?

Actually it's more than 12 months.

 

[polaris20]

Probably a lot more than $300. $700? Klarna charges like 30% sometimes when I see them offering on Amazon. The math isn’t adding up. It’s a financial company with investors. One more party to take part of people’s money. Sad to see Apple go the Amazon route. Even Amazon has their own payments like pay for five months or 12 months without any fees. Just only on select products. I mean Apple could easily create their own bank, but I guess they don’t want to be the ones sending people to collections?

Don’t know. Could be. I tried finding info on that, and haven’t come up with anything so far.