Apple is getting ready to launch a program called Apple Upgrade that would let you pay a monthly fee to use an iPhone, Mac, iPad, or Apple Watch instead of buying it outright. The service could go live as soon as July 28, according to a Bloomberg report published July 21. It would be available only in the US at first. (Bloomberg, Engadget)

The idea is similar to leasing a car. You pay a set amount each month for a fixed period. When the lease is up, you can upgrade to a newer model, give the device back, or keep it. You can also pay it off early if you want to own it sooner. iPhones and Apple Watches would be on 24-month leases; iPads and Macs would be on 36-month leases. Signing up requires a credit check, but a soft one — the kind that does not affect your credit score.

Not every Apple device is eligible. The iPhone 16, MacBook Neo, Apple Watch SE, and base iPad are excluded, Bloomberg reported. Apple Upgrade also will not include AppleCare, Apple's extended warranty and support service. That is different from Apple's existing iPhone Upgrade Program, which bundles AppleCare into the monthly payment.

The financing side is handled by Klarna, a company that specializes in letting people pay for purchases in installments. Bloomberg reports that this arrangement lets Apple offer the subscription without having to lend money itself or take on the risk that customers might not pay. Klarna has been an official Apple reseller since October 2024 and already runs a storefront called "Apple from Klarna" that sells Apple products with flexible monthly payment plans. Apple has also offered Klarna as a payment option within Apple Pay since 2024. (Klarna)

Apple may also stop offering its current financing options. According to the Bloomberg report, the company could stop accepting new sign-ups for the iPhone Upgrade Program and its standard monthly financing alongside the Apple Upgrade launch. That would leave the new subscription as the main way to spread out the cost of an Apple device, at least in the US.

This is not Apple's first try at a hardware subscription. The company explored a similar idea before but dropped it in 2024 over concerns about managing the financial side. Partnering with Klarna appears to solve that problem by letting someone else handle the lending and the credit risk.

The broader context is Apple's bumpy history with consumer financing. In 2022, Apple launched Apple Pay Later, a service that let users split a purchase into four interest-free payments over six weeks, with no late fees. It was designed to compete with Klarna and Affirm. Apple scrapped it shortly after launch, after moving the lending in-house and sidelining Goldman Sachs, its banking partner at the time. (Financial Times, Financial Times)

The shift from building its own payment service to teaming up with an outside lender suggests Apple has decided that running a lending operation is more trouble than it is worth. Apple Pay Later required Apple to evaluate customers' credit and manage the risk of missed payments. Apple Upgrade hands that job to Klarna, which already has the systems in place for monthly device payment plans through its existing Apple store. The trade-off is that Apple gives up the direct financial relationship with the customer in exchange for a subscription program it does not have to fund itself.

For Klarna, the deal deepens a relationship that started with a simple Apple Pay integration and grew into authorized reseller status. Klarna's existing Apple store offers products with payment plans starting at $17.99 per month over 24 months, a structure that likely shaped the terms now being formalized under Apple Upgrade. (Klarna Store)

If the July 28 target holds, the launch would come before Apple's usual fall hardware update. That timing would position the subscription as the default way to buy for people planning to get the next iPhone, rather than starting small alongside the new devices.

In my view, the Klarna partnership is the most telling detail. Apple certainly has the money to run its own leasing program. What it seems to lack is the willingness to deal with the regulations and headaches that come with being a lender. Teaming up with Klarna lets Apple find out whether customers are ready to treat phones and laptops like Netflix or Spotify — something you pay for monthly rather than buy — without building the financial machinery itself. If it catches on, expect it to expand. If it does not, Apple has let someone else take on the risk.