Apple to Launch ‘Upgrade’ Device Leasing Program With Klarna to Spur Sales

A customer holds iPhone purchases at an Apple retail store.

Apple Inc. is preparing to introduce Apple Upgrade, a leasing program that will mark one of the biggest-ever changes to how the company sells devices.

The new service, planned to launch July 28, will support most iPhone, Mac, iPad and Apple Watch models, according to people with knowledge of the matter. Apple is partnering with Klarna Group Plc as the financial backer for the program, said the people, who asked not to be identified discussing unannounced initiatives.

The initiative will launch initially at least in the US and will be available both in its physical retail stores and online. Shares of Klarna jumped as much as 11% to $20.78. Apple’s stock was little changed. An Apple spokesperson declined to comment. Representatives for Klarna didn’t immediately respond to a request for comment.

The Apple Upgrade service will work like a subscription and users can pay off the device early during their term, upgrade early to a new model or keep it at the end of the leasing period. In certain cases, those transactions will incur an additional fee. Like a car lease, it can also be returned at the end of the term.

Leases for iPhones and Apple Watches will run for 24 months, while Mac and iPad plans will run for 36 months. Users will need to be approved for the program via a soft credit check.

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The new program will launch weeks after Apple raised prices by hundreds of dollars across Macs, iPads and other devices in response to an industrywide memory shortage. Apple is also widely expected to hike iPhone prices when new models are unveiled in September.

Apple plans to advertise the program as a way to have lower payments versus current financing programs. The company is planning to discontinue new enrollments for its current iPhone payment programs — the iPhone Upgrade Program and standard financing — to make way for the Apple Upgrade initiative.

Unlike the iPhone Upgrade Program of today, Apple Upgrade doesn’t include AppleCare. Certain devices, including the Apple Watch SE, entry-level iPad, iPhone 16 and MacBook Neo, aren’t eligible. Business and education purchases are also excluded.

Apple had been eyeing its own in-house iPhone and hardware subscription program before canceling the plan in 2024. By partnering with Klarna instead, Apple gets the benefit of offering such a way to buy its products without taking on the financial responsibility.