Damon Beres, writing for The Atlantic under the hed/subhed: “The New iPhone Underclass: Apple’s rental program is a trap”:

The Klarna plan — “Apple Upgrade,” which replaces the iPhone Upgrade Program — is truly, legally, a lease. This is confusing! And it’s confusing in part because this is not how Klarna, a well-known buy-now, pay-later service, typically operates: When you use Klarna for clothing from Shein or lip kits at Sephora or an Xbox at GameStop, you’re paying back a loan, exactly as you were in the original iPhone Upgrade Program. Same if you use Klarna to buy a Samsung Galaxy phone. But with Apple Upgrade, you are renting: The Mac or Apple Watch is not yours until the final payment is made.

I don’t think this is confusing at all. Apple Upgrade is the primary brand for this program, not Klarna. Klarna is really only mentioned in the small print. You get into Apple Upgrade through Apple. Off the top of your head, do you remember Apple’s bank partner for the now-discontinued iPhone Upgrade Program? (It was Citizens Bank.) The Samsung program Beres links to above is named “Klarna Pay in 4”. “Apple Upgrade is a leasing program partnered with Klarna” is easily understood.

Here’s what Beres thinks is a “trap”:

Consider a student or a young professional, or perhaps an underemployed older one, who needs a new laptop. They decide on a MacBook. Apple Upgrade will appear to be the best deal: In its announcement, Apple offers the example of a 14-inch MacBook Pro that retails for $1,999 but that can be had for a monthly lease. Perhaps this person goes for the two-year term, which has them paying $54 a month. Best Buy, which currently has the same computer on sale for $1,849, offers an 18-month loan repayment with $103 installments. Apple’s deal appears to be cheaper: The 24-month lease adds up to $1,296; Best Buy’s 18-month loan lands at the store’s full retail price of $1,849.

Why does Best Buy’s laptop seem more expensive? It’s because the plan is actually designed for you to fully pay off the device. At the end of the 24-month MacBook Pro lease, meanwhile, the consumer will still owe $703, meaning that the actual total price of the Apple arrangement is $1,999 — higher than Best Buy’s offer.

This has nothing to do with the differences between Apple Upgrade’s leasing terms and Best Buy’s 18-month loan. It’s the difference between Apple’s retail price of $1,999 and Best Buy’s $1,849. Guess what? $1,849 is less than $1,999.

I generally like paying for everything I buy up front. The only thing I have a loan for right now is our home. So when Apple Upgrade was announced, I approached it with skepticism, presuming that participants would wind up paying more over time than they would buying devices outright up front. But no. There is no interest penalty. If anything, if you presume inflation is still going to run a bit high for the next few years, buying devices through Apple Upgrade might be a slightly better deal than paying up front.

Is it a “trap” that at the end of your 24-month lease you still owe $703 if you want to buy it? I would say that’s not a trap at all, given that you’d have only paid $1,296 to date on a $1,999 device. I’m not trying to be obtuse. I get it. If you pay the full $1,999 up front, or take a loan to pay the full amount over 24 months, then, after two years, you own the device outright and you might not be tempted to buy a new device for a few more years. If instead you lease it and still owe $703 after 24 months, you might be inclined to think that it’d be no fun at all to pay $703 to finish purchasing a now-two-year-old MacBook, even if the price is totally fair and carries no interest penalty. It’s just not fun. What might seem fun, at that point, is to just hand the leased MacBook back to Apple and start a new lease on a brand-new MacBook. That’s surely the appeal of this whole thing from Apple’s perspective — that leasing entices people to keep starting new leases every two years rather than just sit back and enjoy a fully-paid-for device for a few additional years. I think it’s a stretch to call that a “trap”, though.

Ryan Christoffel, writing for 9to5Mac:

Apple Upgrade launched this week, and the iPhone Upgrade Program is being discontinued as a result. But despite some similarities, the two offerings are not the same. Here are the key differences.

I wrote yesterday that there seemingly is no catch with the new Apple Upgrade program, but there’s at least one, which Christoffel’s piece doesn’t note. When you lease an iPhone through Apple Upgrade, you need a cellular account on one of the big three U.S. carriers: AT&T, T-Mobile, or Verizon. That kind of stinks, and I’m not quite sure I understand why. You’re leasing the iPhone through Apple and Klarna, not the carrier, so I don’t know why Apple cares. If you know why, shoot me a message and explain it. Is it just a simplistic credit-risk evaluation, where prepaid plan-holders and MVNO users in general are viewed suspiciously?

I’ve been hearing a lot of good things about the higher-quality MVNOs, especially US Mobile. (Quinn Nelson mentioned last week on The Talk Show that he’s on US Mobile.) But if you’re not on one of the big three you can’t lease an iPhone through Apple Upgrade.

(I think the old iPhone Upgrade Program required you to have a plan on one of the big three carriers too, so that might be why Christoffel didn’t mention it — it’s the same, not a difference.)

Last week 9to5Mac reported on code in the latest iOS 27 developer beta seemingly meant to restrict leased devices after the user had missed one or more payments. When engaged, Restricted Mode limits the device to the following apps:

• Accessibility Reader
• App Store
• Health
• Magnifier
• Phone
• Clock
• Settings
• Wallet
• Passwords

And some limited access to apps like Messages or health-related apps that might have critical messages.

Many people reasonably speculated that this feature was related to Apple Upgrade, Apple’s new device leasing partnership with Klarna, which Mark Gurman spoiled a few weeks ago. But an Apple spokesman confirmed to Emma Roth at The Verge today that “There will be no restricted mode and/or there will be no limitations put on device functionality due to missed payments or default with the Apple Upgrade program.”

Writing again today, here’s 9to5Mac’s Marcus Mendes:

Apple, however, did not tell The Verge what Restricted Mode is intended for. One possibility is that it was developed for financing programs offered by carriers, retailers, or other partners outside Apple Upgrade, potentially including markets where device restrictions are already used to enforce installment agreements.

In India, lenders have worked in the past with smartphone manufacturers to remotely block financed devices after borrowers missed payments. As The Economic Times reported last year, the Reserve Bank of India (RBI) told non-bank lenders to stop the practice in late 2024, amid concerns about lenders sharing customers’ default information with device manufacturers.

The regulator may now permit a more limited version of the practice. As Reuters reported in May, the RBI proposed allowing lenders to restrict certain functions on financed phones once a loan is at least 90 days overdue, provided the borrower agreed to the measure in the contract and received advance notice.