Apple Upgrade: Is Leasing Your Next iPhone Worth It?

[sw1tcher]

Well at least there aren't any mileage overages at .25¢ per mile.

A mileage overage charge of 1/4 of one cent is cheap when the typical range is 15¢ to 30¢

 

[BC2009]

I have stopped the whole "sell my used iPhone on eBay" thing ever since the carriers started offering inflated trade-in values amortized over 36 months (which is my typical upgrade period). For my last two upgrades, AT&T gave me bill credits totaling over $1000 for my phone trade-in. This was way more than I could have gotten for selling a 3-year-old iPhone.

Not great if you want to be able to switch carriers penalty-free or if you need multiple eSIM's from different carriers, because you get a carrier-locked iPhone. But the hassle of unlocking is gone now as AT&T has automatically removed the carrier lock after the last payment the last two times.

 

[ChrisA]

Even more proof that you should buy your phone outright and decide what is best after a year.

Why. The lease costs exactly the same as buying. If you buy the phone at the end of the lease, the deal is just a 2-year interest-free loan. Zero-percent financing is always "worth it".

 

[AppleWes]

Zero-percent financing is always "worth it".

Sure and I personally use Apple Card payments for that reason/setup but would never finance or trust Klarna

To each his own

 

[Wags]

Likely for revenue recognition purposes. If Apple did it themselves, they would most likely not be able to recognize the full revenue of the sale right away. In this Klarna arrangement, Klarna becomes the owner of the device and is leasing it to the customer. It's a 100% sale for Apple and they can recognize 100% of the revenue immediately.

And just as important. They sell the device and they’re done. Don’t have to support anything other than any warranty issues.

 

[Ameer_1]

I'll stick with upgrading yearly by just financing it with my Apple Card and trading it in or keeping it, depending on the price this year. Apple gave me $580 for my 16 Pro last year, so I financed the $519 on my Apple Card.
I have a feeling that the price will be drastically high, like the MacBook $200+, so who knows if I'll upgrade or not depending on if the trade in value increase

 

[ghostface147]

A mileage overage charge of 1/4 of one cent is cheap when the typical range is 15¢ to 30¢

Ah dammit. That's what I meant.

 

[WishyWashyUK]

Don’t forget that this will mostly be used for new iPhone 18 Pro etc models which will (almost) certainly get a price hike, so it’s almost pointless doing the calculus right now. Basically they want to promote the 18 Pro / Ultra with what looks like a similar monthly payment to the 17 Pro now on IUP, but without the AC+ and you don’t automatically own it at the end. Thats the key difference to watch out for.

 

[Ethrem]

Sure and I personally use Apple Card payments for that reason/setup but would never finance or trust Klarna

To each his own

I'll stick with upgrading yearly by just financing it with my Apple Card and trading it in or keeping it, depending on the price this year. Apple gave me $580 for my 16 Pro last year, so I financed the $519 on my Apple Card.
I have a feeling that the price will be drastically high, like the MacBook $200+, so who knows if I'll upgrade or not depending on if the trade in value increase

You're both assuming that Chase will allow ACMI to continue in its current form.

 

[MrMojo1]

'Worth' is subjective.
If your current phone works and meets your needs, then there's possible Need to upgrade, maybe upgrade the battery instead to last another few years.
If you want the latest iPhone and you have the money, it's Your choice!

It's weird how people even now want the latest smartphone as it's just a smartphone and No one really displays it like some sort of trophy anymore. In this current economy, people complain about high prices on many goods yet willingly want to pay for a new iPhone because they Want, Not Need, it.
Leasing.. unless you plan to buy out the product at the end, you will own nothing and be happy!
To each their own.

Not everyone subscribes to the big 3 cellular companies, as many people use MVNOs, many of which do not have the newer smartphones available. So the only viable option is to buy it unlocked from Apple.
Have a 13PM with ~87% battery life, >4 yo and it still works &, for now, meets my needs.
The prices of the Pro models have become expensive.
Too bad Apple doesn't make the Plus model anymore, esp. in red, as all newer models now have the ProMotion screens and don't need the updated camera, not being a photographer or for social media.
Larger screens are better for those with aging eyes.
Will wait until after the 18 pro models are released and read the reviews on their form, functionality & performance.

 

[TruthAboveAllElse]

That doesn’t cover comparison with carrier financing. I could get the 17 Pro and have no payments so long as I keep my plan for 2 years and trade in a device. So the question is if I switched to a cheaper plan would I save enough to use Apple Upgrade instead. But since it requires a major carrier post paid I won’t really be able to save much by switching. So it’s kind of dead in the water to me. And to anyone else on a carrier plan that offers upgrades.

 

[Kar98]

You will own nothing and you’ll love it. Or else.

 

[mnls]

Nothing that Apple does is pro-consumer.

 

[TheLinkster]

So there's no included depreciation, making your residual a straight subtraction of payments made from the MSRP. This is objectively a bad deal.

You understand paying for depreciation would increase the monthly payment, right?

 

[mistymac]

This program is made to upgrade every time, it’s not a huge deal, why you have a phone? To call people, check emails and stuff like that… if your iphone does the job, why upgrade? When you buy an iphone, it can do the job for many people at least 4 years !

Sir this is a Wendys... (MacRumors)

 

[ramanjassal98]

I wonder what the reason behind Apple’s purchase of Credit Kudos was for? This seems like a perfect opportunity for their tech? Or to at least bring Apple Card internationally!

 

[AppleWes]

You're both assuming that Chase will allow ACMI to continue in its current form.

It would be nice if they did but no issues if not.
I trade in and pay off anyways or will save throughout year when I decide to upgrade.

Although I've always been the type "if can't afford to pay cash don't buy it" outside of auto or home financing

 

[neuropsychguy]

The carrier deals are FAR better. I'm with T-Mobile and I would spend $0 owning an iPhone if I traded in my current phone of the new one (T-Mobile will give me bill credits for the iPhone cost). That's the cheapest way to own an iPhone and upgrade it... The best part... After it is all over I own the iPhone free and clear too! So no money out of pocket and I own my device.View attachment 2648670

I know we had several back and forth comments the other day, which I appreciated.

If you qualify for a trade-in promo like that and plan on sticking with your carrier for 2 years, that's a much better deal, of course. However, that's on T-Mobile's $100 / month Experience Beyond/Go5G Next plan (drops to around $50 per line if you have 4 or more lines per plan + taxes and fees).

However, as someone who uses T-Mobile, my plan (one of the legacy ones that's still kicking around -- shhh! don't tell T-Mobile my rates haven't gone up) does not qualify for that promo. To go to that plan versus my current unlimited one would cost about $300 more per month (not kidding about that)! I could buy a new iPhone every 3-4 months with the cost savings of my current plan relative to that plan. In other words, there's a reason why some plans have promotions like that.

Now, occasionally (at least in the past) T-Mobile runs good bill credit promos on other plans (that's how I've got most of my family's iPhones for not a lot of money), but most people aren't willing to pay or capable of paying that much for phone plans. I'm not. If that was my only option with T-Mobile I'd leave T-Mobile in a heartbeat and use a $15 / month MVNO and have plenty of money to invest or splurge on iPhones.

So while Apple's new leasing/purchase at the end plan isn't good for your situation, it's an option for people with less expensive plans.

 

[jz0309]

"Worth it"? That depends on a lot of things.
For one, get AC+ when doing this.
Second, check ALL deals incl the carrier financing/"free phone" offerings.
Third, if you have an Apple Card, you'd miss out on the 3% cash back, and other cards might offer cash back or points.

Me, no thank you.

But, if I were to buy a high-spec Mac that could run well above $5k, I'd run the numbers

 

[rufwork]

“If you simply want to spend the least amount of money on iPhones over time, buying them upfront and reselling them privately is very likely the best option”

Ugh no. Why wouldn’t you take the free money (0% loan) if this was your plan?

They’re doing this b/c they want constant income and poor financial planners are going to look at the “huge” payoff at the end and say, “I can’t afford that. But I can afford $50 a month and get a new phone!”

No, um, no you can’t. Or you can afford to pay it off but you’re living hand to mouth.

What’s insidious is that you know they’re going to ding people for the condition of the phones at the end of the lease payment and charge fees on top of the monthly cost.

But no, unless you’re worried about the credit hit, take the “lease”/0% loan instead of paying up front and invest the difference while you’re paying. In fact that’s the only way I’d advise someone to use the Upgrade program.

 

[LogicalApex]

I know we had several back and forth comments the other day, which I appreciated.

If you qualify for a trade-in promo like that and plan on sticking with your carrier for 2 years, that's a much better deal, of course. However, that's on T-Mobile's $100 / month Experience Beyond/Go5G Next plan (drops to around $50 per line if you have 4 or more lines per plan + taxes and fees).

However, as someone who uses T-Mobile, my plan (one of the legacy ones that's still kicking around -- shhh! don't tell T-Mobile my rates haven't gone up) does not qualify for that promo. To go to that plan versus my current unlimited one would cost about $300 more per month (not kidding about that)! I could buy a new iPhone every 3-4 months with the cost savings of my current plan relative to that plan. In other words, there's a reason why some plans have promotions like that.

Now, occasionally (at least in the past) T-Mobile runs good bill credit promos on other plans (that's how I've got most of my family's iPhones for not a lot of money), but most people aren't willing to pay or capable of paying that much for phone plans. I'm not. If that was my only option with T-Mobile I'd leave T-Mobile in a heartbeat and use a $15 / month MVNO and have plenty of money to invest or splurge on iPhones.

So while Apple's new leasing/purchase at the end plan isn't good for your situation, it's an option for people with less expensive plans.

I have also enjoyed our discussions. That's a very good point!

 

[Core.2]

My main concern is that Klarna determines the condition of the device when it is returned.

 

[spunkystrawberries]

Definitely a great program for Macs and I may well do that when I get my next one if the program is still around although trade in value with Apple for Macs absolutely sucks so I would have to try to sell it or hand it down to someone locally.

Yeah, I'm curious about that. Obviously Apple's most popular product is iPhones, and that's what 90% of the comments in this thread are about, but how does it actually shake out for more expensive devices like Macs or tablets?

If I wanted to upgrade at the end of my lease...
If at the end of the lease, I can look at the trade-in value (as if I owned it) or average private selling value (as if I owned it), and if those are higher than my remaining balance, I'd pay off the remaining balance so I own it, and go through one of those channels. Then turn around and update to a newer device if I wanted to (and could choose to do the lease program again). Seems like I'm losing literally nothing there?

If the values are lower than my remaining balance...
Unlikely, but possible... then I'm probably better off still paying off the remaining balance and just not upgrading at the time, which would essentially be the same as if I'd just bought out outright to begin with. So seems like I'm not losing anything here either?

On the flip side, since these are essentially 0% loans, I'm getting to put my money elsewhere where it can earn more than 0% interest during the duration of the lease. In theory, I should be coming out ahead.

I've said several times... I'm not a fan of Klarna. I would/could do this also via Apple Card to stick purely with Apple (and Chase), but the lease periods are shorter (it looks like 12 months?) versus Apple Upgrade (with Klarna) which has 36 month leases for Macs. This means lower payments... (still at 0% interest), and therefore still seems like a better deal. Especially because I'm definitely not going to be upgrading my Macs every year.

Please check my math and logic. In this scenario, this seems like it would actually be a good move? What am I missing?

The one potential Apple Card trade off is missing out on the 3% cash back at the outset. But Apple's docs say you can still use the Apple Card to make your lease payments and get 3% cash back there as well, so that seems to balance out?

 

[mistymac]

It’s no coincidence this is introduced during the price hikes and before the upcoming “uLtRa” Mac and iPhone lines.

This might be somewhat useful for the very responsible (a rarity), but for most Klarna is just a predatory company that diminishes the Apple brand being attached to it (imo).

Why are so many people in these comments worried about what other people do? How does it change your life if a stranger makes a bad financial decision with their own money? Look, I don't care for Klarna either, or really any bank, lender, etc. but no one is forcing anyone to use Klarna or to lease a device. If you all care so much then please take that energy somewhere more constructive, get involved in politics and law, try to make a real change! The government allows these 'predatory' companies to exist in the first place.

 

[Royksöpp]

My main concern is that Klarna determines the condition of the device when it is returned.

You wouldn't beat up a rental, the same thing applies here. Hopefully people will have enough common sense to realize that.