Apple's New Upgrade Program: Is It Worth It?

[doolar]

No mater what do NOT trust Klarna

Fair warning extremely predatory company and since Apple "partners" with them I'm curious if they have access to even more account details.

I hate to defend Klarna, but why shouldn’t you trust them? I use Klarna a lot buying online and paying the invoice 14 or 30 days later with zero cost or interest.

I’ve used Klarna since they were launched here in Sweden (Klarna is a Swedish company) and have never had any issues.

 

[LogicalApex]

I’m trying to figure out how this is different than the old program?
wasn’t it technically a lease or finance? I mean citizens loan owned the contract not Apple.
Old program:
1) you could upgrade annually at no additional fee, just an increase to your monthly plan
2) it came with applecare

New program:
1) monthly payments based on a 1 or 2 year term. You can still upgrade early but now there’s a fee.
2) no AppleCare
3) loan through klarna and not citizens loan.

What am I missing?

As others have pointed out, this one is also subject to damage inspections by Klarna too.

So it remains yet to be seen how often they cite "damage" and what that boils out to. Can get annoying quick, even with Apple Care, as you would have to get the device returned from Klarna to get it repaired by Apple under Apple Care if they cite damage (and Apple doesn't have to fix "cosmetic" damage under AC+).

 

[abracadaver]

No but the trade in value is usually over 50% after 12 months so while you still have to pay the phone off, your new phone is much less.

That's basically what I figured. I may just buy the new phone outright this cycle, then go for the trade-in credit next year and in future.

I'm currently in the IUP, so will probably take Apple up on their option to exit. Probably a lot of other people in a similar boat.

 

[DEMinSoCAL]

I just spoke with a sales associate from Apple over text. I wanted to know what the “fee” (that they briefly mention on the site) to upgrade early to the new iPhone 18 Pro would be if I got the iPhone 17 Pro and wanted to upgrade early… Turns out, it’s really ******.

You have to pay off the full lease. That’s it. It’s like getting out of an apartment lease.

You have the phone for two months, the new phone comes out, and you either wait for your lease to end OR you pay 10 months or 22 months of payments before you can get the new phone and begin paying leases again.

That’s insane. Coming from a person who needs a new phone now but still wants to get the new-new one when it comes out, this is a terrible idea right now. Maybe once the 18 Pro releases, I’ll feel differently, but this in general is just terrible.

In no universe will any company give you high-priced item on a lease and allow you to just hand it back in two months for the next latest and greatest, so not sure why you're so surprised. The minute you open the box and activate the phone, it's lost a tremendous amount of value. Sort of like driving a car off the lot -- it immediately loses a ton of value.

It's a term-based lease, not a month-to-month rental.

 

[turbineseaplane]

My TCO on the preowned iPhone Mini I bought is now getting close to $100/ year, and falling.

I personally will stick with my methodology of buying lightly preowned and giving phones a good long run.

 

[turbineseaplane]

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

This is an extremely valid concern.

 

[svandive]

Well the other hit with Apple going with Klarna is that they are automatically viewed negatively by the three major credit bureaus. As soon as they see accounts on your credit report from Klarna you'll take an extra hit in your FICO (and other) score. This was a terrible choice by Apple.

Apple basically had this exact same program several years back through Best Buy and Citizens Bank. It was fantastic, I bought a new iPad, my mom a new iMac, my Son a new MacBook Air, and my wife a new MacBook Air. It was called Upgrade+. You paid 36 installments than at the 37th you could return the item and walk away, or make the final 37th (ballon) payment and keep the device, or trade the device in towards a new machine. I was excited to see Apple bringing this back, but now with Klarna as the financial clearing house, I have to pass. I personally don't have anything against Klarna, but if the Credit Agencies are going to ding me for having them on my credit report then it's simply not worth it.

 

[solideliquid]

This is an extremely valid concern.

In terms of returning the phone to apple or Klarna at the end of the lease, and worrying about some damage to the phone. I can see the exact same situation at the Apple Store, say you are trying to trade in your iPhone 16pro max for an 18 pro max, but your phone has some scratches on the screen. Apple may tell you they would not accept it, or they would ask you to repair the device first. If you are worried about this, always get AppleCare that way if there is any damage, the cost remains low.

 

[Ethrem]

Well the other hit with Apple going with Klarna is that they are automatically viewed negatively by the three major credit bureaus. As soon as they see accounts on your credit report from Klarna you'll take an extra hit in your FICO (and other) score. This was a terrible choice by Apple.

Apple basically had this exact same program several years back through Best Buy and Citizens Bank. It was fantastic, I bought a new iPad, my mom a new iMac, my Son a new MacBook Air, and my wife a new MacBook Air. It was called Upgrade+. You paid 36 installments than at the 37th you could return the item and walk away, or make the final 37th (ballon) payment and keep the device, or trade the device in towards a new machine. I was excited to see Apple bringing this back, but now with Klarna as the financial clearing house, I have to pass. I personally don't have anything against Klarna, but if the Credit Agencies are going to ding me for having them on my credit report then it's simply not worth it.

The CFA code is worth less than 5 points, it's an extremely small negative, and most people already have one from another loan they weren't aware coded as one like personal loans from non-traditional lenders and captive financing from automobile manufacturers, not to mention people using BNPL already. Quite frankly the entire notion of a CFA is outdated at this point and FICO should just get rid of it.

 

[Ethrem]

In terms of returning the phone to apple or Klarna at the end of the lease, and worrying about some damage to the phone. I can see the exact same situation at the Apple Store, say you are trying to trade in your iPhone 16pro max for an 18 pro max, but your phone has some scratches on the screen. Apple may tell you they would not accept it, or they would ask you to repair the device first. If you are worried about this, always get AppleCare that way if there is any damage, the cost remains low.

Apple is very clear about what they consider acceptable on a trade in and scratches are not a big deal. If it's a crack, however, they may reduce the trade in value. Klarna nor Apple have disclosed their requirements for this lease, however.

 

[dampfnudel]

At first this sounds like a great idea with no downsides, but the problem is that Apple is doing this through Klarna, which is one of the most predatory companies out there, that takes advantage of people living paycheck to paycheck by burying them in debt that they can't possibly hope to ever repay.

So yeah, no thanks.

Why the heck couldn't Apple just handle this themselves? They have the capital to do so, why partner with vultures?

Birds of a feather flock together.

 

[dampfnudel]

It’s too bad you don’t have the option of using a service like Mint Mobile. I’m with T-Mobile at the moment, but I’m considering switching to Mint or another provider. Then again, I’ve never leased anything, not even a vehicle, so it would feel weird to pay every month for my iPhone 18 Pro or whatever iPhone I get.

 

[iLOLWUT]

So what would the numbers look like for the new ultra with the 1tb storage $2999 I'm guessing?

 

[1d1otic]

There is a trap that Apple Upgrade does NOT show the amount of buyout price at the end and doesn't decrease the overall value per year.

 

[TruthAboveAllElse]

There is a trap that Apple Upgrade does NOT show the amount of buyout price at the end and doesn't decrease the overall value per year.

But you only pay what you’d pay if you bought it up front. And you pay it more spread out. Essentially, because of inflation, they are paying you to finance it. Why do they do it? It increase sales. Apple is subsidizing this. It’s a pretty good deal. Although, not as good as many carrier deals, and you have to have a major carrier for it to work anyway. I’ve not found a cheaper carrier plan than what I have, and I get a fully subsidized phone with trade in. This upgrade program would benefit people not on major carriers the most, yet they won’t qualify.

 

[CMoore515]

Well the other hit with Apple going with Klarna is that they are automatically viewed negatively by the three major credit bureaus. As soon as they see accounts on your credit report from Klarna you'll take an extra hit in your FICO (and other) score. This was a terrible choice by Apple.

BNPL do not affect your credit score, positively or negatively right now. They're on the report but they do not factor into your score. Klarna and the like also don't hard pull your credit FWIW.

 

[EBone12355]

You can get much better deals through your carrier. ATT often offers new iPhones for $5-$12 a month, with a charge and immediate credit of $25-$35 a month so long as you continue to use ATT.

 

[Compote]

You should ask if the iPhone itself is worth it at that price, and the answer is no.
Next, the new upgrade program is predatory and looks to strip you of all rights and warranties, as well as spy on you.
It's not worth it.

BTW you will lose all your encrypted data if you do this. You cannot transfer encrypted data from phone to phone with Apple's method. Signal chats will be lost.

 

[Ethrem]

BNPL do not affect your credit score, positively or negatively right now. They're on the report but they do not factor into your score. Klarna and the like also don't hard pull your credit FWIW.

It's called a Consumer Finance Account and it does affect your credit although it's very minor. Most people don't even see the negative reason code unless their file is so good that they don't have other negative reason codes.

 

[keifer123]

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 !

Exactly! And i still see a lot of folks who are on iPhone 11 or 12 Pro. It does the job. I'll upgrade when my iPhone is no longer supported by the latest iOS.

 

[CEmajr]

I wouldn’t use it for iPhones but for the Mac it is tempting due to their higher price points and less frequency in upgrading.

 

[Christopher Kim]

A few have mentioned it, but to me, the "unknown" aspects of this, which remain to be seen, are:

1) How tough will Klarna be on trade-in condition at the end of the lease? Apple's requirements for trade-ins tend to be fairly loose (especially in person). But they are Apple - the customer-facing Company. They want you to trade-in (as the vast majority are using the trade-in to subsidize a new purchase). Klarna being the counter-party here, is an unknown. There are plenty of horror stories of Apple's mail-in trade-in partner, Phobio.

Almost certainly they'll be tougher than Apple, although if enough people complain, perhaps Apple will pressure Klarna to be more receptive (or maybe they already have in their deal) for this to work and be considered favorable long-term.

2) Today, Apple's trade-in prices for 1yr old iPhones is definitely >50% of the MSRP. I don't know the exact numbers, but I think it tends to be in the 60% range (for base model - you get hosed if you upgrade storage as the trade-in value doesn't change). True FMV is even higher (eg. if you sell on Swappa or Ebay), as iPhones hold their value really well over time (I'd guess 65-70% for 1yr good condition iPhones, although there's scam risk/fees).

If the Upgrade program becomes popular, will Apple reduce their Trade-In prices to be more in-line so there isn't this arbitrage opportunity? (eg. Lease the phone for 12mos, buy-it out at 12mo period for essentially 50% price, trade-it right away for 60% and buy a new one?)

 

[chips99]

A few have mentioned it, but to me, the "unknown" aspects of this, which remain to be seen, are:

1) How tough will Klarna be on trade-in condition at the end of the lease? Apple's requirements for trade-ins tend to be fairly loose (especially in person). But they are Apple - the customer-facing Company. They want you to trade-in (as the vast majority are using the trade-in to subsidize a new purchase). Klarna being the counter-party here, is an unknown. There are plenty of horror stories of Apple's mail-in trade-in partner, Phobio.

Almost certainly they'll be tougher than Apple, although if enough people complain, perhaps Apple will pressure Klarna to be more receptive (or maybe they already have in their deal) for this to work and be considered favorable long-term.

2) Today, Apple's trade-in prices for 1yr old iPhones is definitely >50% of the MSRP. I don't know the exact numbers, but I think it tends to be in the 60% range (for base model - you get hosed if you upgrade storage as the trade-in value doesn't change). True FMV is even higher (eg. if you sell on Swappa or Ebay), as iPhones hold their value really well over time (I'd guess 65-70% for 1yr good condition iPhones, although there's scam risk/fees).

If the Upgrade program becomes popular, will Apple reduce their Trade-In prices to be more in-line so there isn't this arbitrage opportunity? (eg. Lease the phone for 12mos, buy-it out at 12mo period for essentially 50% price, trade-it right away for 60% and buy a new one?)

Based on what they have listed on this page for when it's time to upgrade I take it that the trade-in to get the new device and the inspection would be done by Apple and not Klarna as it says that you can return the device to an Apple Store or use the pre-paid kit that will be mailed by you, which again I would think would be Apple, but can't be 100% certain.

https://www.apple.com/shop/apple-upgrade/how-to - under the last section "Return your current device"

I've never heard anything about this prior with the old iPhone Upgrade Program, but it will be interesting to hear what happens when it's time to turn in some of these devices and since Apple Care is not included and must be purchased separately. If someone has a device that has been repaired by a store/location that is not Apple and for some reason Apple/Klarna deems the repair as "not acceptable." I can only imagine they would be forced to pay for a repair by Apple to get the phone back to an acceptable return state?

I've never returned my phone in person at a store since I've been in IUP, but I have to imagine that there is some internal diagnostic that is run like when you go in for a repair or battery replacement so they can make sure the device is "ok." What is going to be the option if that scan shows there is an issue or perhaps some unauthorized part that has been used in the phone?

Personally, I always purchase AppleCare because I just prefer to go to Apple and have them take care of it since they make the phone. Yes, I know I will hear the folks who say you're just overpaying for a repair that can be done somewhere else for less, but it's just my preference.