# Apple iPhone Upgrade Program Ends as New Klarna Lease Means Many Users May Never Own Their iPhone > Source: > Published: 2026-07-29 06:28:57+00:00 # Apple iPhone Upgrade Program Ends as New Klarna Lease Means Many Users May Never Own Their iPhone ## After the recent Mac and iPad price hikes, the subscription strategy prepares buyers for costlier future hardware On Tuesday, Apple revealed that US shoppers will soon have the option to lease an iPhone for up to two years, with plans starting from $17.99 (£13.53) a month. ## Apple Shifts to Klarna Leasing The new Apple Upgrade programme works alongside buy now, pay later firm Klarna and will be available across both Apple's high street stores and its online shop. Once applicants pass a soft credit assessment, they can secure a one- or two-year iPhone lease. Similar arrangements will also be offered for the Apple Watch, while Macs and iPads will be available on two- or three-year agreements. The announcement comes just a month after Apple [increased](https://www.ibtimes.co.uk/apple-macbook-ipad-price-increase-ai-memory-demand-1805132) the starting prices of iPads and Macs by at least $100 (£75.19), with some models rising by more than $1,000 (£751.91), driven by a global memory shortage. With analysts expecting further price increases for the next iPhone launch, the lease scheme allows Apple to soften the impact of higher upfront costs by shifting the focus to more manageable monthly payments. Following Apple's hints at price rises in June, IDC senior research director Nabila Popal told CNBC that 'most of Apple's consumers, especially in the U.S. and other developed markets, are buying devices on installment plans or trade-ins, so we can expect to see much more aggressive offers.' ## Why Apple Is Betting on Monthly Payments Apple remains focused on expanding its monthly payment options, a strategy investors believe will help smooth seasonal sales fluctuations and reduce reliance on major device launches to drive growth. A streamlined leasing model could also encourage customers to upgrade more frequently, particularly as Bernstein estimates the average iPhone replacement cycle has stretched to nearly four years. Under the lease agreement, handsets must be returned at the end of the two-year (24-month) term, although customers can choose to buy the device outright with a final payment or trade it in for a newer model. Klarna requires no security deposit and does not charge late payment fees, but the lender will terminate the agreement if payments fall three months into arrears. Monthly costs vary considerably depending on the model, with premium handsets carrying higher fees. An unlocked iPhone 17 Pro, for example, costs $31.99 (£24.05) a month on a two-year lease or $45.99 (£34.58) a month over a single year. Certain entry-level products, including the base iPhone 16 and MacBook Neo, are excluded from the scheme. ## Higher iPhone Prices Could Be Next Since Apple's June price increases, analysts have expected further rises for future iPhones. Morgan Stanley estimates Apple may need to raise the price of the iPhone 18 Pro by around $200 (£150.38) to protect its gross margin. Meanwhile, component teardowns by TechInsights suggest rising memory and component costs could [increase](https://www.ibtimes.co.uk/iphone-18-pro-price-surge-memory-chip-shortage-1809933) an iPhone's bill of materials by as much as $300 (£225.57). At the same time, Apple continues to shift its product line-up towards more premium hardware. Market watchers expect a [foldable model](https://www.ibtimes.co.uk/apple-new-iphones-foldable-production-2026-1807763) to debut alongside the iPhone 18 Pro range this September, with some projections putting its price at around $2,500 (£1,879.79). ## Apple Confirms End of Upgrade Program For prospective buyers, the Klarna partnership offers a more affordable leasing option than previous alternatives. Under the outgoing iPhone Upgrade Program, subscribers paid from $42 (£31.58) a month over 24 instalments for a package that included AppleCare and financing through Citizens Bank. Apple confirmed on Tuesday that it has now shut down the legacy US programme, adding that existing members will be migrated to the new Apple Upgrade system. © Copyright IBTimes 2025. All rights reserved.