Apple iPhone lease plan with Klarna starts at $17.99 a month

Apple’s iPhone lease plan is coming to U.S. customers through Klarna, with monthly pricing starting at $17.99, the company announced Tuesday. For everyday investors, the move shows Apple trying to make higher-priced devices feel more manageable by shifting the pitch from the full sticker price to a smaller monthly bill.

The program is called Upgrade and will be available through Apple’s retail stores and online store. Klarna, which provides buy now, pay later loans, will handle the financing after customers pass a soft credit check, according to the announcement.

Apple said customers will be able to lease an iPhone for one or two years. The company will also offer a similar option for Apple Watch, while Macs and iPads will be available on two- or three-year leases.

How does Apple Upgrade work?

A lease means the customer pays to use the device for a set period rather than owning it outright from the start. At the end of 24 months for an iPhone lease, customers must return the device, pay an additional amount to buy it, or move into a new device, according to Apple.

Apple said the program does not require a security deposit. Klarna will not charge late fees, but leases will be terminated after three months of missed payments.

Pricing will depend on the device. CNBC reported that an unlocked iPhone 17 Pro will cost $31.99 a month on a two-year lease, or $45.99 a month on a one-year lease. Some lower-priced products, including the iPhone 16 and MacBook Neo, are not part of the program.

Why Apple is pushing monthly payments

The timing matters because Apple has already raised some prices. CNBC reported that Apple increased starting prices for iPads and Macs by at least $100 in June, citing a global memory shortage, with some models rising by more than $1,000.

Analysts expect iPhone prices to rise this year as well. Morgan Stanley estimates Apple may need to increase the iPhone 18 Pro price by roughly $200 to protect its gross margin, which is the share of sales Apple keeps after product costs. TechInsights said higher memory and other component costs could add as much as $300 to an iPhone’s bill of materials, based on its component-level teardown.

Nabila Popal, senior research director at IDC, told CNBC that many Apple customers in the U.S. and other developed markets already buy devices through installment plans or trade-ins. She said after Apple signaled price increases in June that more aggressive offers were likely.

The lease structure could also help Apple address a longer replacement cycle. Bernstein estimates the average iPhone replacement cycle has stretched to nearly four years, according to CNBC. A lease with a built-in endpoint gives Apple another way to bring customers back to a store or checkout page sooner.

Apple has long been watched by investors for ways it could smooth out the ups and downs of hardware demand. Device leasing may make revenue less tied to one-time upgrade waves, although Apple has not said how much demand it expects the new program to generate.

What changes for Apple customers?

Apple said it has discontinued the iPhone Upgrade Program in the U.S. and will transition customers to Apple Upgrade. The older program included AppleCare and used Citizens Bank financing, with current payments of more than $42 a month over 24 installments, according to CNBC.

The Klarna deal also puts Apple in closer competition with wireless carriers. AT&T, Verizon and T-Mobile have long used installment plans and trade-in subsidies to attract customers and keep them on multiyear service plans.

Apple still offers zero-interest financing through Apple Card Monthly Installments. Apple Pay users also currently have access to short-term loans from Klarna and rival Affirm.

Apple is scheduled to report third-quarter earnings Thursday. CNBC reported that it will be Tim Cook’s final earnings report as CEO before he moves to the role of executive chairman of the board.

This story draws on original reporting from CNBC.