Apple Launches Rental Model for Devices, Replacing Some Financing Plans

Apple is introducing a significant shift in its business strategy with the launch of "Apple Upgrade," a new model that allows customers to rent rather than purchase the company's devices. This initiative, announced on July 28, extends to most iPhone, Mac, iPad, and Apple Watch models.

In partnership with Klarna Group Plc, which is providing financial backing, the service operates on a subscription basis. Contracts for iPhones and Apple Watches will span 24 months, while Mac and iPad rentals will last 36 months. Initially, the program will be available only in the United States, requiring users to pass a credit verification process.

Subscribers will have flexibility at the end of their contract term. They can choose to upgrade to a newer model, keep the device, or simply return it. Apple is positioning "Apple Upgrade" as a more economical monthly option compared to its existing financing plans. The company is also phasing out new users for its current iPhone financing programs to transition them to this new rental model.

Notably, the new service will not include AppleCare coverage, unlike the previous iPhone Upgrade Program. Certain devices, including the Apple Watch SE, entry-level iPads, the iPhone 16, and the MacBook Neo, will be excluded. Furthermore, the program is not intended for purchases by businesses or educational institutions. This announcement follows recent price increases on Apple's computers and tablets, attributed to rising costs of key components like RAM and storage.