At first glance, the new Apple Upgrade program seems like a no-brainer. Why pay the full $1,199 for a new iPad Pro when you could spread the cost by leasing it for 24 or 36 months with no interest or additional fees? A 24-month lease for the 256GB iPad Pro will cost you $32 per month for a total of $768. After that, you can pay the remaining cost or exchange the iPad Pro for a newer model.
At a time when gadget prices continue to rise, including Apple’s, a new upgrade program with a low monthly fee seems like a win for buyers. But of course, as with all things credit, there are downsides to consider.
For one thing, it’s a rental program, so you don’t actually own the device you’re paying for. I suppose it’s not functionally different from paying off something with credit, but it introduces new problems at the end of the lease. According to Apple’s FAQ, “You must return your device in good working condition at the end of your rental term.” If you wish to return or exchange your device, you may be charged a damage fee, depending on its condition. Apple says you can also pay for AppleCare protection to avoid damage fees (unfortunately, it’s not included with the new Upgrade Plan, as it was with the iPhone Upgrade Plan).
If you’re tired of paying monthly fees, you can simply buy out the remainder of your lease. But if you want to end the lease entirely, you’ll also have to pay a “substantial” fee, according to Apple. The company says that upgrading early (before the 12, 24, or 36 month period you signed up for) may also incur a “substantial” fee, depending on how many months are left on your lease. If you don’t pay off the lease at the end of the term (or trade in for a new device), you’ll also automatically move to monthly payments for up to six months. Apple also warns that “your monthly payments may increase” during these additional months.
Unlike the iPhone Upgrade program, your rental and monthly fees for the Apple Upgrade program are managed by Klarna, a buy now, pay later company. Apple already offers Klarna as a payment option in Apple Pay, so this isn’t exactly a new partnership. But as with all things credit, Klarna could be considered predatory. His ideal clients are young people who don’t have the best credit. They are also the most vulnerable when it comes to facing additional fees and payment defaults.
All that being said, if you can comfortably afford the monthly fee for the Apple Upgrade program, it’s a smart way to acquire new devices. It’s easier than applying for an Apple Card, and it’s cheaper than the 0% APR payments the card offers for Apple hardware. And I have to admit, that $32-a-month iPad Pro looks tempting…but I’m going to figure out my plan for when this lease ends before I sign up.
