Apple is preparing to launch a hardware subscription program called Apple Upgrade in partnership with Klarna, with the service potentially going live as soon as July 28, according to a Bloomberg report published July 21. The program would cover most iPhone, Mac, iPad, and Apple Watch models and would initially be available only in the US. (Bloomberg, Engadget)

The structure is straightforward: customers lease a device over a fixed term, with options to upgrade to a newer model, return the device at the end of the lease, or keep it. They can also pay off the device early during the lease period. Leases for iPhones and Apple Watches would run 24 months; iPads and Macs would be on 36-month terms. A soft credit check — the kind that does not affect your credit score — is required to enroll.

Not every Apple device qualifies. The iPhone 16, MacBook Neo, Apple Watch SE, and base iPad are excluded from the program, Bloomberg reported. Apple Upgrade also will not support AppleCare, a notable departure from the existing iPhone Upgrade Program, which bundles AppleCare into its monthly payment.

The Klarna partnership is the financial mechanism that makes the program viable for Apple. Bloomberg reports that the arrangement enables Apple to offer a hardware subscription without taking on the financial responsibility itself. Klarna, already an official Apple reseller since October 2024, launched a storefront called "Apple from Klarna" that sells Apple products directly to consumers with flexible monthly payment plans. Apple has also offered Klarna as a buy now, pay later (BNPL) option within Apple Pay since 2024. (Klarna)

Apple may also wind down its existing device financing options. According to the Bloomberg report, the company could stop accepting new sign-ups for the iPhone Upgrade Program and standard financing options alongside the Apple Upgrade launch. That would consolidate Apple's device-purchasing options around the new subscription model, at least in the US market.

This is not Apple's first attempt at a hardware subscription. The company previously explored a similar service but abandoned the plan in 2024 over financial-oversight concerns. The Klarna partnership appears to resolve that barrier by shifting the lending and credit risk to a third party.

The broader context here is Apple's uneven relationship with consumer financing. In 2022, Apple launched Apple Pay Later, its own BNPL service that let users split purchases into four interest-free installments over six weeks, with no late fees. That service was designed to compete directly with Klarna and Affirm. Apple later scrapped it shortly after launch, after having moved the lending operations in-house and sidelined Goldman Sachs as its banking partner. (Financial Times, Financial Times)

The trajectory from building a proprietary BNPL product to partnering with an external lender for a leasing program suggests a pragmatic recalibration. Apple Pay Later required Apple to underwrite consumer credit and manage repayment risk directly — essentially acting as a bank. Apple Upgrade offloads that responsibility onto Klarna, which already operates the infrastructure for monthly device payment plans through its existing Apple storefront. The trade-off is control: Apple cedes the financial relationship with the customer in exchange for a subscription channel it does not have to capitalize.

For Klarna, the arrangement deepens a relationship that began with a simple Apple Pay integration and progressed to 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 informed the terms now being formalized under Apple Upgrade. (Klarna Store)

If the July 28 target holds, the launch would precede Apple's typical fall hardware cycle, positioning the subscription as the default purchase path for customers eyeing the next iPhone refresh rather than a pilot program that ramps alongside it. For a company that has spent years searching for the right way to turn hardware ownership into a recurring relationship, that timing would give the new model a full season to prove itself before the next wave of devices arrives.

Worth noting is what this means for anyone already in an Apple financing arrangement. If the company does wind down the iPhone Upgrade Program and standard financing, existing customers on those plans would eventually face a decision point when their current terms end. We have seen this pattern before, when carriers shifted from two-year contracts to device installment plans — the transition worked, but it took time and left some customers temporarily confused about their options. Apple has not yet detailed how it would handle that migration, and the Bloomberg report does not specify whether current enrollees would be moved to Apple Upgrade automatically.

In my view, the Klarna partnership is the most interesting part of this story. Apple has the balance sheet to finance its own leasing program many times over. What it apparently lacks is the appetite for the regulatory and operational overhead that comes with being a lender. Partnering with Klarna lets Apple test whether customers will treat phones and laptops the way they treat streaming services — as something you pay for monthly rather than buy outright — without building the financial plumbing itself. If the model works in the US, expect it to expand. If it does not, Apple has offloaded the risk.