Hands-On Apple 242 transcript
Please be advised that this transcript is AI-generated and may not be word-for-word. Time codes refer to the approximate times in the ad-free version of the show.
Mikah Sargent [00:00:00]:
Apple launched a new way to pay for its products this week. It's called Apple Upgrade. It covers iPhone, Apple Watch, Mac, and iPad, and payments start at just $11.99 a month. But here's something you need to understand. It's a lease. It runs through Klarna, and it's replacing the iPhone Upgrade Program entirely. That means at the end of your term, the device goes back to Apple unless you write another check. So let's walk through what you're signing up for, what it takes to get approved, and what you can get out of it.
Mikah Sargent [00:00:32]:
Podcasts you love. From people you trust. This is TWiT. Hello and welcome to Hands On Apple. I am Micah Sargent, and yes, today we are looking at the Apple Upgrade Program. First and foremost, it's important to understand that Apple Upgrade, as it's called now, is a device lease. And this lease is provided by Klarna Inc. That means it's not a loan and it's not an installment purchase.
Mikah Sargent [00:01:09]:
Okay, that's something that's important to understand because Klarna traditionally has done loans that are sort of installment purchases. So at the end of it, you then get whatever it is that you're paying for. So this isn't that way. Another thing to be aware of, it's available in the US only. And also doesn't seem to include US territories. It's available online, in the Apple Store, and at Apple Store locations. And at the end of the term, this is the big thing, you return the device. You do not own it unless at the end you decide to pay a separate purchase option fee.
Mikah Sargent [00:01:45]:
Now, let's kind of dig into this because there are many terms and many understandings about the prices. For the iPhone and the Apple Watch, there are 12 or 24-month terms. For the iPad and the Mac, there are 24 or 36-month terms. 6-month terms, and the monthly prices start like this. For the iPhone, $17.99, Apple Watch, $11.99, iPad, $11.99, and as you might imagine, for the Mac, $24.99. So Apple does provide an example in its online sort of rundown of how this works. So you can actually, here we are on iPadOS, if you're watching, see the new apple.com/shop/apple-upgrade page on here. You can see an Apple Watch and it talks a little bit about the upgrade program, the monthly payments, the option to upgrade, et cetera, et cetera.
Mikah Sargent [00:02:42]:
For Apple's own example, an iPhone 17 Pro at 256 gigabytes would be $1,099. So $1,099. And that runs $31.99 a month on a 24-month lease or $45.99 a month on a 12-month lease. Of course, this is all before tax. If you live in Oregon like I do, no tax. So what is eligible? What devices can I actually get from Apple? Well, every current iPhone, every MacBook Air, the MacBook Pro, the iMac, the Mac Studio, the iPad Pro, the iPad Air, the iPad Mini, the Apple Watch Series 11, the Apple Watch Ultra, all available and eligible for Apple Upgrade. Here's what's not eligible. The iPhone 16 and 16 Plus, the budget Apple Watch, the Apple Watch SE, the MacBook Neo, the Mac Mini, the A16 iPad, the Studio Display, and of course, anything that you buy refurbished.
Mikah Sargent [00:03:46]:
This also excludes the employee purchase plan, the Apple at Work plan, as well as government, education, veterans, and military plans or stores. Those do not have this functionality. Now, when it comes to how you can join this plan and what you need to do, again, this is provided through Klarna. Apple asks you for your legal name. It asks you for your date of birth, your phone number, your email, your billing address, your Social Security number, or your ITIN. You have to be 18 years of older, excuse me, 18 years or older. It depends though, if the legal age in your state is younger or older, then that will make a difference. Of course, be a US resident, and of course have an Apple account in good standing, Apple says.
Mikah Sargent [00:04:34]:
Also able to receive verification codes by text. If you're curious how this plays out with Klarna and your credit, it's a soft credit check, so it should not ding your credit score. Uh, now here's the thing, and sometimes I guess people can get a little tripped up in this. Klarna in doing this, does not accept prepaid cards. Klarna also doesn't accept American Express or UnionPay, doesn't accept cards issued by Chase or Capital One. Apple Pay and PayPal, not accepted for Apple Upgrade at all. The Apple Card, though, is fine. And if you do use the Apple Card, you'll earn 3% daily cash on those lease payments.
Mikah Sargent [00:05:13]:
So, might be the best way to go. 2 more conditions. Leasing an iPhone requires activating on AT&T, T-Mobile, or Verizon. So no prepaid plans. You've got to activate it if you do an iPhone. And the phone itself does stay unlocked, so no worries there. No down payments are allowed. This is a full-on purchase plan, or rather lease plan.
Mikah Sargent [00:05:33]:
That's very important. I said purchase plan. It is not for purchasing. Trading in a device at enrollment is the only way that you can lower your monthly payment. So you can do it, but you have to do a trade-in, and that credit applies only to your initial term. Ordering for in-store pickup means that you are left with 7 days to collect it. If you don't get it within 7 days, the lease is canceled. So I just I just want you to understand kind of the terms and conditions here, the gotchas and everything that's involved.
Mikah Sargent [00:06:01]:
Uh, when it comes to the lease, uh, everything, billing schedule, remaining payments, support chat, this is all going to happen in the Klarna app or the Klarna service. This is not an Apple Store app. Klarna will collect the lease payment fully. Apple separately bills for AppleCare and any unfinanced accessories. So Apple will take care of those. Apple very much is saying, Klarna, you handle this. And AppleCare is not optional because it's not included in the lease. You have 60 days after enrolling to add it, or you can fold the device into if you have an AppleCare One plan.
Mikah Sargent [00:06:38]:
The device has to come back in good working condition. So if you don't have coverage and you have damage, well, then Klarna pay— requires a one-time damage fee. Of course, You can also repair the device before you return it, and then you don't have to pay that fee. Particularly helpful if you have AppleCare. If the device is lost or stolen, as long as you have AppleCare+ with Theft and Loss, then you can use that process. But if you do not have AppleCare+ with Theft and Loss, you're on the hook. You have to pay the early termination fee, or you can do the purchase option fee, and then payments will keep running until you do one or the other. If you change your mind, are you able to cancel your plan? Yes.
Mikah Sargent [00:07:24]:
14 days from receiving the device, you can return it and cancel cleanly. After that, exiting early is going to cost an early termination fee equal to every remaining payment on the term plus tax. That said, any accessories that you financed through Klarna Are yours to keep. So if you end up not being able to pay it, it seems like they're not requiring you to send back, uh, the accessories that you financed that way. So here's how upgrading works, because remember that this is called Apple Upgrade. It's not about Apple Lease, it's about Apple Upgrade. You become eligible for a no-fee upgrade once you've made every monthly payment on your term. So that means 24 payments on a 24-month lease, 12 payments on a 12-month lease.
Mikah Sargent [00:08:16]:
Apple notifies you when you're eligible. You can opt out of this notification if you don't want it. You close the old lease, you apply for a new one, you transfer your data, and then you return the old device using a prepaid kit that gets sent to you, or you can also drop it off at an Apple Store. It needs to be returned within 14 days of your new device arriving. If it does not, well, you'll be paying for 2 leases at once. You can upgrade early. This is a big question that I saw, but early means paying off the whole remaining term first. And when it comes to the end of term decision, when you have reached the end of your term and it comes time to do the upgrade, you do have 3 options.
Mikah Sargent [00:08:55]:
You can upgrade and return the device that you have. You can leave the lease or the Apple upgrade program and return the device that you have, no longer continuing on with the lease. Or there is a 3rd option. Which is that you can buy the device outright. Klarna has a purchase option fee that will be there at the end. Cool thing is you do get 6 months to decide. So at the end of the term, during those 6 months, you do keep paying monthly. If a trade-in credit was applied at enrollment, your payment goes up.
Mikah Sargent [00:09:31]:
Okay. During that window, because the credit Only covered the initial term. So again, if that term continues on, that credit is no longer there. And so your payment is going to go up. If you do nothing for 6 months and Klarna automatically charges you, or excuse me, if you do nothing for 6 months, then Klarna will automatically charge you the purchase option fee. Because remember that you either upgrade and return the device that you have or leave the program. And return the device that you have. That third option of buying the device means that some way you're going to have to buy it or else Klarna will charge you.
Mikah Sargent [00:10:08]:
You're going to own it, whether or not that was the plan. The iPhone Upgrade Program and iPhone Payments, those are both ending in the US. When you're eligible, your options are going to be to lease with Apple Upgrade, finance with Apple Card monthly installments, buy outright, or go with the carrier options. You can access this through the upgrade program to learn where you stand. And this is specific to iPhone upgrade program members. So if you've been doing the iPhone upgrade program up to this point before Apple's new Apple upgrade, then this, you may be going, what am I supposed to do? Well, check it out at apple.com/shop/iphone/iphone-upgrade-program. I know that's a horrible URL. But that does have the information that you need to know as a person who is part of a program that's coming to an end.
Mikah Sargent [00:11:02]:
All right, that is a rundown of what you need to know about Apple's new upgrade program. So if you're thinking about doing this, here's the homework for you. Do the math for your own situation before you enroll. You know, so what you want to do is take that monthly payment, multiply it by the term length, and then compare it to the device's sticker price. And then you ask yourself whether you actually hand your phone back every 2 years or if you hold onto it for 4. If you're currently in the iPhone upgrade program, definitely go sign in and check your status now so that you're not making this decision under pressure later because things will be changing for you. That is going to do it for this week's episode of Hands On Apple. Thank you so much for taking the time to join us this week.
Mikah Sargent [00:11:49]:
Uh, let me know if you end up joining Apple's new Apple Upgrade. I'd love to hear about your experience. And I'll catch you again next week for another episode. Goodbye.
