Apple Upgrade leasing program to replace iPhone Upgrade, Bloomberg says

Apple is set to launch the Apple Upgrade leasing program on Tuesday, July 28, and will close the iPhone Upgrade Program to new customers, Bloomberg reported Sunday. Digital Trends reported that the program will begin in the United States with 24-month leases for eligible iPhones and Apple Watches and 36-month leases for Macs and iPads.

The shift would mark a material change in Apple’s device sales model, moving part of the upgrade cycle from installment financing toward leasing. Bloomberg reported that existing iPhone Upgrade Program members will be allowed to remain in that plan for the time being, while Apple stops taking new enrollments.

How does Apple Upgrade work?

Apple Upgrade will operate more like a subscription than a conventional loan, according to Bloomberg. Customers will be able to pay off a device before the end of the term, move to a newer model earlier, keep the original product until the lease ends, or return it at the end of the period.

A lease differs from financing because the customer pays for use of the device over a set term rather than taking a loan designed to transfer ownership through installments. Bloomberg compared the structure to an auto lease, under which the asset can be handed back when the agreement expires.

The new program will not include AppleCare, Bloomberg reported. It will also replace Citizens Bank, the financial backer behind the iPhone Upgrade Program, with Klarna as the backer of Apple Upgrade.

Bloomberg reported that Apple intends to market the leasing plan as a way to lower monthly payments compared with current financing offers. The report also said Apple did not include the iPhone in a recent round of price increases, while expectations remain that the company will raise iPhone pricing when its latest model is introduced in September.

Which Apple devices are covered?

The program will support most iPhone, Mac, iPad and Apple Watch models, according to Bloomberg. Digital Trends reported that eligible iPhones and Apple Watches will be offered on 24-month leases, while Macs and iPads will be offered on 36-month leases.

The launch follows earlier changes in Apple’s consumer finance strategy. In December 2024, Apple was reported to have stopped work on an iPhone hardware subscription program after software problems and concerns about possible regulatory scrutiny.

Earlier in 2024, Apple also shut down its buy now, pay later product after stricter rules were announced by the Consumer Financial Protection Bureau. Apple then began promoting third-party BNPL options from Affirm and Klarna.

The reported move gives Klarna a larger role in Apple’s retail financing system and gives Apple another tool to spread device costs over time. For customers, the key distinction is that Apple Upgrade is structured around temporary use and potential return of a device, rather than a standard installment path tied to ownership.

This story draws on original reporting from PYMNTS.