RESOLVING THE LEDGER
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When I first heard about the new Apple Upgrade program , which lets you lease devices like iPhones and MacBooks for a monthly fee, I was offended. It amounts to paying a tithe to one of the world’s richest companies just to borrow devices for a couple years, rather than buying them outright. You could then choose to purchase the device, which is outdated at that point, or upgrade and keep paying that monthly fee. You may never own an iPhone again.
Then, as my mind wandered to the stack of old phones in my closet, it occurred to me: What’s so great about owning these things to begin with?
Apple, of course, would love to sell you a new iPhone for keeps. Its most advanced model, the iPhone 17 Pro Max, will set you back $1,200, a price that’s expected to rise soon due to the global shortage of storage and memory chips . You can sign up for an installment plan — most carriers offer these, as does Apple through its credit card — and pay it off in two to three years. Or you could lease the thing for $35 a month under the new Apple Upgrade program. You can pick a 12-, 24-, or 36-month lease , depending on the device, and you don’t get to keep the phone at the end of the term unless you decide to buy it by paying off the remainder of the retail price in one lump sum. (This is similar to the controversial rent-to-own model you find at places like Rent-a-Center.)
For the financial side of the new program, Apple has partnered with none other than Klarna, the “buy now, pay later” giant. When you go to lease a new device, Klarna runs a soft credit check and decides if you’ll be able to cover the monthly payments. When I asked Klarna, the company did not tell me where it draws the line here, but it’s worth noting that critics have accused Klarna of a lack of underwriting and of lending to people with subprime credit scores . If you miss three consecutive payments, Klarna will terminate the lease agreement and possibly send a collection agency after you.
“How do I know people aren’t getting a good deal here? If they were, Apple wouldn’t be offering it.”
Aaron Perzanowski, University of Michigan law professor
While there was some speculation last week that Apple might lock people out of leased devices if they failed to pay their bill, Apple confirmed to me that it will not put limitations on device functionality due to missed payments or default. If you want to cancel the lease, you face an early termination fee. If you choose to keep paying the monthly fee, you can keep upgrading with new lease agreements for new devices every few years, existing in this cycle indefinitely.
“I don’t think people are getting a good deal here,” said Aaron Perzanowski , a law professor at the University of Michigan and author of The End of Ownership: Personal Property in the Digital Economy . “How do I know people aren’t getting a good deal here? If they were, Apple wouldn’t be offering it.”
Buy an iPhone? In this economy?
If you’re someone who likes to get a new iPhone or MacBook on a regular basis, Apple’s new leasing option might make a lot of sense. The monthly fee to lease these devices is cheaper than the payment plan to buy them, and electronics are depreciating assets. If you own one, you can sell it or trade it in for credit toward a new device, but they’re all worth less and less as time goes on. Furthermore, Apple eventually stops supporting old devices through software updates, so they might just stop working at a certain point. Put another way: You may own the phone, but you’re still just licensing the software that makes it work.
Renting an iPhone does sound bleak, though. The United States is suffering through an affordability crisis as prices across the board rise in the face of new tariffs and new wars. Meanwhile, AI is promising to transform the way we work if it doesn’t simply steal our jobs first , adding further insecurity, and the data center boom is making electronics more expensive . This era of economic anxiety is pushing people to use “buy now, pay later” services like Klarna and Affirm to pay for groceries or a tank of gas . (These companies faced scrutiny by state attorneys general a few years ago for operating like predatory lenders.) And now Apple, surely suspecting that many people can’t afford to pay full price for new phones, is inviting us to rent our devices at a monthly fee that undercuts the path to ownership.
Apple could have just called this the Apple Rental program, by the way. Lease sounds nicer, though, like something you do with a car.
“It is funny that they frame it as not a loan but as a lease,” Louis Hyman , a history professor at Johns Hopkins University and author of Debtor Nation: The History of America in Red Ink . He added that “leasing” has class implications, suggesting that you’re either someone who needs to have the newest things but can’t afford them, or that you’re so wealthy, you’re indifferent to money.
Suffice it to sway, the bulk of people who will soon be leasing their iPhones are probably not the ones who are indifferent to money.
Apple adopts its final form
The new Apple Upgrade program is the company’s latest customer acquisition strategy. As the rising price of hardware has made cheaper Android devices or the refurbished market more attractive, Apple is offering upgrade enthusiasts and budget-minded users, including people who simply couldn’t afford to buy Apple products in the past, a deal to join the company’s ecosystem. After all, keeping people supplied with new iPhones and MacBooks also helps keep them subscribed to Apple services, like iCloud, which now makes the company more money than Mac, iPad, Apple Watch, and other accessories combined.
There’s not necessarily any harm in giving people a cheaper way to access expensive but useful products. For more than a century, installment plans have enabled people to buy modern conveniences like sewing machines , radios, and eventually, t...
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