What's the catch with the Apple Upgrade program?
The Verge analyzes Apple's new device leasing program with Klarna, breaking down monthly costs, end-of-lease options, and the fine-print risks BNPL users face.
Intelligence analysis by Llama
Apple's Upgrade program lets users lease iPhones, iPads, Macs, and Watches through Klarna, promising payments no higher than the full retail price. The Verge crunches the numbers and finds the biggest catch: it is a loan, and missed payments can trigger debt collection.
Apple made a new way to get iPhones and other gadgets where you pay a little each month instead of all at once. It sounds cheap, but it is really a loan from a company called Klarna. If you forget to pay three times, Klarna can take back the gadget and ask for all the money at once, or even send the debt to collectors.
Analysis
A Lease, but Make It a Loan
At first glance, Apple has reframed device ownership as a subscription. Customers pick an iPhone, iPad, Mac, or Watch, agree to a one- to three-year term, and pay a flat monthly fee that Apple promises will never exceed the device's full retail price. The Verge's math backs that up for many configurations: a two-year lease of the iPhone Air runs $695.76, several hundred dollars under its $999 sticker. But the framing obscures what is actually happening. The program is financed through Klarna, a buy-now-pay-later provider, meaning Apple is not extending credit — Klarna is. That distinction matters because it shifts the legal and financial relationship from the world's largest smartphone maker to a fintech whose business model has drawn sustained criticism from consumer advocates.
The Klarna Factor
The article's most consequential disclosures concern Klarna's own terms. According to a Klarna spokesperson, missing three payments in a row triggers lease termination and the customer becomes liable for the entire outstanding balance. The Verge notes that a Klarna support page indicates unpaid debts can be sent to collections, though it is unclear whether that policy applies to Apple Upgrade specifically. Klarna also reserves the right to use customer data for personalized advertising, a privacy trade-off that is rarely highlighted at the point of sale. Apple, for its part, walked back a concern raised by 9to5Mac that missing payments would activate a "Restricted Mode" on the device — spokesperson Brian Bumbery told The Verge no such functionality restrictions will apply. That clarification reduces one category of risk but does nothing to address the underlying credit exposure.
When the Low Monthly Cost Is the Marketing Hook
The arithmetic is not the only place to look. The article points out that AppleCare, optional in name but effectively encouraged, adds between $3.99 and $9.99 per device per month — and $19.99 to cover up to three. Early termination fees, damage charges, and a six-month decision window during which the monthly bill still accrues can quietly inflate the total. More broadly, LendingTree data cited in the piece shows that nearly half of BNPL users paid late on at least one loan in 2025, a reminder that low nominal payments correlate with stretched household budgets. For customers who upgrade every cycle, the program offers a tidy way to stay current; for everyone else, it is a credit product whose terms deserve the same scrutiny as any other loan.
Key points
- Apple's Upgrade program is a Klarna-financed lease covering iPhones, iPads, Macs, and Watches on one- to three-year terms with payments capped at the full retail price.
- Missing three consecutive payments allows Klarna to terminate the lease and demand the full outstanding balance, with possible referral to debt collection.
- Apple confirmed that no device-restriction mode will be activated for missed payments, walking back earlier code-level speculation spotted by 9to5Mac.
- AppleCare protection ranges from $3.99 to $9.99 per device per month and is effectively encouraged to cover damage charges at lease end.
- Klarna uses customer data to serve personalized ads, adding a privacy trade-off that is not highlighted in Apple's marketing for the program.
For disciplined users who upgrade frequently, the program genuinely delivers savings and predictable monthly costs, and Apple's confirmation that no restricted mode will lock out delinquent customers removes a notable fear factor. If Apple and Klarna maintain transparent terms and competitive rates, the Upgrade program could become a mainstream way for households to absorb premium hardware costs.
LendingTree's 2025 data shows nearly half of BNPL borrowers pay late on at least one loan, and Klarna reserves the right to send unpaid balances to collections, which could leave already-stretched consumers with damaged credit and a returned device. AppleCare add-ons, early termination fees, and Klarna's ad-targeting use of customer data compound the effective cost and privacy cost of what is marketed as a simple monthly plan.
