Apple has officially pulled the plug on its long-running iPhone Upgrade Program, replacing it with a new leasing option called Apple Upgrade that’s backed by Klarna. The new program, which launched on July 28, covers not just iPhones but also iPads, Macs, and Apple Watches, with monthly payments starting as low as $17.99 for an iPhone and $11.99 for an Apple Watch. While the broader device selection and lower base prices will appeal to many shoppers, the switch from a traditional installment plan to a lease structure means there are some important details worth understanding before signing on the dotted line.
For starters, you never actually own the device at the end of your lease unless you pay a final buyout amount, which is calculated as the original cost of the device minus whatever you paid during the lease term. If you’d rather upgrade or walk away, you simply return the equipment. The lease terms run 24 months for iPhones and Apple Watches and 36 months for iPads and Macs. The good news is that iPhones leased through the program come unlocked, though you do have to select AT&T, Verizon, or T-Mobile at checkout and maintain a postpaid plan. You can still switch carriers later or add a second eSIM if needed.
One thing that might catch people off guard is what happens when payments are missed. There are no late fees, and a missed payment just gets rolled into the following month’s bill. However, if you miss three consecutive payments, Klarna automatically terminates the lease and the full remaining balance becomes due immediately. Returning the device reduces what you owe by its current value, but failing to either return it or pay up means the account heads to collections. On a more reassuring note, code found in the iOS 27 beta suggesting Apple might restrict apps and services on leased devices with missed payments does not apply to Apple Upgrade, so your phone will continue working normally even if you fall behind.
A few other caveats round out the picture. AppleCare+ is no longer bundled like it was with the old iPhone Upgrade Program, so you’ll need to purchase it separately if you want coverage. Any damage to a returned device will result in Klarna charging you for repairs unless you have AppleCare+, in which case you’ll only pay the standard service fee. Education discounts can’t be combined with Apple Upgrade, refurbished devices aren’t eligible, and several products including the iPhone 16, iPhone 16 Plus, Apple Watch SE, MacBook Neo, Mac mini, A16 iPad, and Studio Display are excluded entirely. Trade-ins are allowed when starting a lease, with the value spread across monthly payments rather than applied upfront, but you can’t trade in when upgrading mid-lease. Klarna also doesn’t accept certain credit cards like American Express, Chase, and Capital One, though Apple Card works fine. Existing iPhone Upgrade Program members don’t need to make any immediate changes but will have to transition to another option at their next upgrade.