Apple Partners with Klarna to Launch iPhone Monthly Rental Plan Starting at $17.99
Alina Collins
Apple launched a device rental plan called "Upgrade" with Klarna, letting U.S. users lease an iPhone for as low as $17.99 a month on one- or two-year terms; with iPhone price hikes looming, the model shifts consumer attention from a large upfront cost to a small monthly number.
How does the rental plan actually work?
Users pick a one- or two-year lease. Monthly rates vary by model — iPhone 17 Pro runs $31.99/month on a two-year term, or $45.99/month for one year.
Approval requires only a soft credit check — no impact on the user's credit score — and no deposit. Klarna charges no late fees, but three consecutive missed payments terminate the lease.
At term end, users can return the device, pay a residual to keep it, or upgrade to the latest model. This means → it works more like a long-term trial with a built-in upgrade path than a traditional installment purchase.
Why is Apple doing this now?
The immediate trigger: rising costs. Last month Apple raised iPad and Mac starting prices by at least $100, citing tight memory-chip supply; some models saw hikes above $1,000.
Analysts widely expect iPhone prices to follow. Morgan Stanley estimates Apple may need to raise the iPhone 18 Pro price by roughly $200 to protect margins; TechInsights' teardown analysis suggests component costs could climb by as much as $300.
In plain terms = phones are getting more expensive, and a rental plan turns a daunting lump sum into a small monthly figure — the number consumers fixate on drops from several hundred dollars to the teens or twenties.
What happens to the old plan, and how is this one different?
Apple is discontinuing its prior "iPhone Upgrade Program" run with Citizens Bank and migrating existing subscribers to the new Upgrade plan.
The old program bundled AppleCare and charged over $42/month across 24 installments — essentially a financed purchase. The new plan is a lease: lower monthly cost, but no automatic ownership at the end.
This means → Apple is shifting from "helping you buy a phone in installments" to "helping you rent a phone," trading a lower entry price for keeping users locked inside the Apple ecosystem.
What does this mean for carriers and upgrade cycles?
The new plan puts Apple in more direct competition with AT&T, Verizon, and T-Mobile, all of which have long used installment financing and trade-in subsidies to lock customers into multi-year contracts.
Bernstein estimates the average iPhone upgrade cycle has stretched to nearly four years. If the rental model nudges users to upgrade more often, it would boost both Apple's device sales cadence and services revenue.
This reflects Apple's core tension: devices keep getting pricier while users hold onto them longer. The rental plan is a single move aimed at both problems — but whether it can absorb meaningful price-hike pressure at scale remains the key test.
Content is for reference only, not financial advice.