Apple partners with Klarna to launch device leasing program, set to replace the current iPhone installment plan.

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Apple is attempting to ease demand pressure caused by hardware price increases by adopting a "subscription-based" sales model.

On July 22, according to reports citing informed sources, Apple will launch a brand-new device leasing service, Apple Upgrade, in the United States on July 28 local time, covering major product lines such as iPhone, Mac, iPad, and Apple Watch, with financing provided by Swedish fintech company Klarna.

The timing of this new plan is noteworthy. As AI infrastructure investment drives up the cost of key components like storage chips, Apple has already raised prices on some Mac and iPad products this year. The market generally expects that the new generation of iPhones to be released in September will see further price increases.

Compared with a one-time payment of thousands of dollars, lowering the consumer purchase threshold with a lower monthly cost is becoming Apple's new strategy to maintain hardware sales.

From Installment Payments to "Hardware Subscription"

The first phase of Apple Upgrade will be available on the U.S. Apple website and offline Apple Stores, supporting most iPhone, Mac, iPad, and Apple Watch products.

This service is not the same as traditional installment payments; it is more akin to a car leasing model: After passing a soft credit check, users pay rent on a monthly basis and can flexibly choose—at any time during the leasing period—to buy out the device in a lump sum, upgrade to a new product early, keep the device after the lease ends (additional payment may be required in some cases), or return it directly.

Different products have different lease terms: 24 months for iPhone and Apple Watch, 36 months for Mac and iPad.

However, this plan does not cover all products. AppleCare+ is not bundled by default, and some low-priced products such as Apple Watch SE, entry-level iPad, iPhone 16, and MacBook Neo are currently not supported. Education and enterprise procurement customers are also not covered.

At the same time, Apple will also stop accepting new user applications for existing iPhone annual trade-in plans and standard installment payment options to make way for Apple Upgrade.

Apple Teams up with Klarna to Reduce Financial Business Risk

Apple Upgrade also marks Apple’s renewed attempt at a hardware subscription strategy, previously put on hold.

Apple had intended to launch its own hardware subscription service, allowing users to pay monthly for Apple devices like subscribing to streaming media, but the project was canceled in 2024. Introducing Klarna as a financing partner means Apple shifts credit, capital, and bad debt risk to a third party, focusing instead on hardware sales and ecosystem operation, and testing the new sales model at a lower risk.

For Klarna, this is also one of its most high-profile partnerships. Leveraging Apple's vast retail channels, Klarna is expected to further expand its consumer finance business footprint. As a result, after the news was announced, Klarna’s stock price rose as much as 11%.

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