Apple is reportedly planning a car lease style financing program for upgrades to new gadgets. It would mean lower up-front costs for many users, but with some major downsides.

The reported Apple Upgrade feature would replace the existing iPhone Upgrade program, which has a monthly fee that covers the handset and the Apple Care+ repair plan, with an option to switch to the newest handset after a year of continuous payments. (Source: 9to5mac.com)

The new system is a financing plan with Klarna, which managed "buy now, pay later" programs for many retailers. It would cover Apple Watches, Macs and iPads as well as phones. The lease period would be two years for phones and watches and three years for the other devices.

Three Lease Options

The idea is that customers would have three options. They could return the device at any time during the lease and stop payments; they would owe no more money but would not get anything back. Alternatively, they could return it at the end of the lease.

The final option would be to keep the handset by paying a lump sum to make up for the shortfall between what they had paid so far and the retail price. With all three options there would be no interest charges, though a big catch is that there may be some additional fees, which haven't been detailed in reports.

Missing Features & Limits

The other big catches are that (as reported) the program does not include Apple Care + (meaning customers would have to pay to repair any accidental damage or cover the cost of lost or stolen devices), and that there isn't an option to switch to a new model released during the lease period. The fees don't cover phone service either, so users would still have to find a cellphone carrier.

The program will only cover newer (and more expensive) models and is for consumer purchases only, with businesses and educational establishments excluded.

It appears Apple is trying to overcome two big limits on its retail business. One is that it's getting harder to make significant advances and improvements with each new model that makes an upgrade feel like a must-have. Another is that supply chain issues with memory and storage mean electronic gadgets mean Apple is raising retail prices significantly. That means monthly payment plans could make the new prices seem more affordable, even if the actual total paid is higher. (Source: bgr.com)

What's Your Opinion?

Would you prefer to lease your Apple devices instead of buying them outright? Are you concerned about the lack of included Apple Care+ in this new program? Do you think rising gadget prices make financing plans like this inevitable?