> If you decide to buy the device, the purchase option fee is the list price minus any lease payments you’ve made minus any remaining discounts or trade-in credit. (excluding tax and any damage fees).
Lets look at a couple examples:
iPhone 17 pro max would be $1199 to buy (~1273 with tax) or $34.99 for 24 months totaling $839.76. So would cost 433.33 at the end of the lease to keep it
The cheapest 16" MBP would be 2,999 to buy (3186.44 with tax) or $57.99 for 36 months (or 80.99 for 24 months). 2087.64 or 1943.76. So around ~1k to buy it at the end.
It looks like you can keep making payments for 6 months to lower the buyout price a little bit.
So worst case scenario this is a 3 and a half year interest free loan with a higher payment at the end.
Seems not terrible? As long as you treat it as a loan and not a lease you can end at any point it seems fine and nothing really shady about it. You still have the option to own the device for the original cost.
Other than the loss of the iPhone upgrade program and the yearly upgrades, am I missing something here? I guess the biggest thing is you likely can't just pay it off and be done with it if you had the money.
> iPhone 17 pro max would be $1199 to buy (~1273 with tax) or $34.99 for 24 months totaling $839.76. So would cost 433.33 at the end of the lease to keep it
A lot of people aren’t going to have that $433 at the end of the lease to purchase the device outright, and so will have to roll it into another 2-year monthly payment, and another one after that.
So the goal of the program is the same as every other similar one - they want to turn a one-time device purchase into a perpetual monthly revenue stream, while keeping ownership of the asset at the end.
> A lot of people aren’t going to have that $433 at the end of the lease to purchase the device outright
I think you're looking at this too much from the perspective of someone who wants to own the phone, not as someone who wants to consider a lease.
Leases are not a new invention. A lot of people, including very financially savvy and well off people, choose to lease rather than buy depending on the circumstances.
It preserves optionality. If you get to the end of the lease period and there’s a new iPhone you want or the battery isn’t holding up, you can choose not to buy it. You don’t have to deal with selling it or trading in.
If someone doesn’t have $400 to buy out the residual then I doubt they would have had the cash to pay for the whole thing up front. I don’t understand what your argument is.
> So the goal of the program is the same as every other similar one - they want to turn a one-time device purchase into a perpetual monthly revenue stream, while keeping ownership of the asset at the end.
It’s an option. They’re not turning anything into anything. Anyone who wants to buy the device can buy it. You now also have the option to lease it for 12 or 24 months and then after that you can still buy it if you want. Or you can not buy it.
You know those financially irresponsible people don’t need this program, right? They would have used a credit card to buy it with much worse terms
You seem tilted at Apple for offering a financing option, but your real gripe is apparently with some people who have poor financial decision making skills. Those people could (and probably would) do a lot worse with traditional options like a credit card.
Can we at least compare apples to apples (hah) and look at the actual terms of the program here? Honestly they're not bad, and I say that as someone who leans toward purchasing outright.
> You know those financially irresponsible people don’t need this program, right? They would have used a credit card to buy it with much worse terms
I thought of this also. The question is whether they will now spend even more on the phone since they won't be paying as much in interest. If so, it's savvy of Apple to suck up that difference instead of letting it go to credit card companies.
Presumably Klarna's share is lower because Apple is rumored to be able to nerf these devices if a series of payments are missed. [1]
> They would have used a credit card to buy it with much worse terms
average credit card interest rate: 18-25% APR [0][1]
average klarna effective interest rate:25-33% APR [2]
getting what are effectively individual lines of credit per-burrito or iphone is crazy work and I wouldn't recommend it most of the time. Save some money up, people!
> average klarna effective interest rate:25-33% APR [2]
> getting what are effectively individual lines of credit per-burrito or iphone is crazy work and I wouldn't recommend it most of the time.
I think this whole sub-thread has gone off track from people who aren't reading the actual terms of the Apple deal.
Nobody's talking about getting a 33% Klarna loan for an iPhone or burrito. You included 2 statistics and 3 citations that have nothing to do with the program we're talking about.
We're trying to talk about the Apple program in the link, not some other financial services complaints that people have about other things.
People are keeping their phones for longer and longer. This makes it as attractive as possible to pay for a new phone at a more frequent rate.
The bet here is that Apple would much rather you spend ~$35/month perpetually than $1200 every 4 years.
This is a 'good deal' if you're already someone who upgrades their phone frequently, but I would imagine this would end up getting a whole bunch of people to pay more money in the long run to Apple.
- from this thread: iPhone 17 pro max would be $1199 to buy (~1273 with tax) or $34.99 for 24 months totaling $839.76. So would cost 433.33 at the end of the lease to keep it
If you upgrade your phone every 1-2 years then what you pay for the phone is something like "full cost - optimistic trade-in value". I see no reason not to do if you know you going to upgrade.
I don't understand this mindset. I get that people who are going to upgrade to the latest flagship phone every 18-24 months will probably do better with this, but realistically... those people are fucking insanely financially irresponsible (and if you can afford it - no shade, I guess, its your money - lord knows I burn lots of cash on hobby projects of my own, although I tend to buy things that are actually projects, and not just glitz...)
But there's just nothing to run on phones built in the last 5+ years that actually puts the hardware through its paces (in the phone form factor, laptops and desktops I'd be lot more forgiving on). The cameras aren't really getting better. The battery capacities seem to be mostly "the same". There's just no practical "reason" to justify the expense at this point (and I'll fully acknowledge this wasn't always the case - there was a period there in the early 2010s where phones were getting better rapidly and upgrading was a big deal).
They're basically buying an expensive piece of jewelry that they'll throw away in 24 months. Like... just buy a cheaper model and get some real jewelry. At least that could be passed down at some point instead of becoming e-waste.
This math is what lead me to the iUp program in the first place. It's effectively a guaranteed 50% trade-in, which came out to about $200-300 in actual money that I was theoretically sacrificing in exchange for not having to worry about the cosmetic condition of the phone or weirdos on ebay.
And it came with AppleCare+ with Theft and Loss. I stopped using a case. I lived free.
I'm a little confused on why anyone would pay this much for a phone. (Although if you consider it conspicuous consumption that happens to work as a phone, I can believe that.)
> So the goal of the program is the same as every other similar one - they want to turn a one-time device purchase into a perpetual monthly revenue stream, while keeping ownership of the asset at the end.
Yep, which reduces the need to make new devices notably better than old ones, since you'll always have a steady stream of customers coming off their leases.
Isn't the 0% APR financing essentially just a sales expense? Even if people generally don't immediately roll into another 2-year agreement, the main reason these zero-interest financing works for the sellers is simply that it makes it easier for people to spend money on expensive high-margin stuff.
Multi-year zero-interest loans are also commonplace in high-price, high-margin specialty retail: think La-Z-Boy, Sleep Number, home improvement, hot tubs, home gym equipment, etc.
>they want to turn a one-time device purchase into a perpetual monthly revenue stream,
Precisely what they should have done for service revenue instead of milking App Store for the past 10 years. They should also have bundled Apple Care as part of it.
It would also allow them to hike up their price for iPhone. For example I wouldn't be surprised if the upcoming iPhone Fold and next year's iPhone 20 / XX start at $1499 to $1999.
My question is how will this roll out world wide, is this going to be like Apple Credit Card, Apple Cash and other things that is US only? Who is actually paying for the interest free loan. Somewhere along the line someone has got to give.
This is all good direction that is happening in the past 12 months, MacBook Neo, Apple Upgrade. Hopefully they will also fix the software part. macOS doesn't need annual upgrade. Perhaps neither do iOS. And the last thing would be about the App Store. But I guess that will take a lot longer.
Given how rapidly iPhones depreciate, being able to just give it back after 2 years is pretty reasonable. My 16 Pro Max is worth maybe $500 on the resale market.
The median US household has a net worth of $200,000. Even a 50th percentile US household is very wealthy by global standards.
Credit card statistics are heavily manipulated because it's easy to make them sound terrible. I don't know which factoid specifically you're referring to, but the studies about "X percent of Americans couldn't handle an emergency expense without putting it on a credit card" often use tricks like including anyone who would pay by credit card if they could. I remember reading some of these studies and realizing that I would have been included in the statistic because I prefer to use a credit card where I can, even though I pay it off before interest accrues.
Net worth or net income? Being 40yo with only 200k of worth between two when you’re halfway through your working life and have had 10y of appreciation of assets isn’t very much to go forward with.
Median wealth in the U.S just around $100k - see Wikipedia & other databases.
how many people own houses ? & for those people that own houses - average equity in those houses is less than 45%.
ain't no factoid - but lived reality of most people. maybe on the coasts where techies and finance bros live - but the rest of america is facing a bleak financial reality.
The number was for household wealth. I think you're looking at individual wealth, which would naturally be lower because it's spread across more people.
>when I mean most people - I mean 50% of the population.
That's not really applicable because:
1. the study is for an "unexpected" expense. This you can see from 2 years away
2. The wording in the study was something along the lines of "would have to dip into savings", not that they literally don't have any money for it. The fed's survey of consumer finances shows the median household has between 7-13k (depending whether you're counting median income or median wealth) in their checking accounts
Should people be more financially responsible? Yes
Are they today? No
In a rational world payday loans, predatory auto loans, BNPL, perpetually rolling credit card debt etc would not need to exist. Yet these sectors are rapidly growing and companies in it are thriving.
I'm saying the specific claim of "most people live on credit cards as bridge finance between paychecks. when I mean most people - I mean 50% of the population" is false.
There are phones that cost a lot less though. 50% of Americans being unable to afford iPhones doesn't mean they should just lease them. People need to stop associating so much personal sense of worth with their handheld computer.
Selling my car that I fully owned in favor of a nice bicycle and an e-scooter was one of my best financial decisions in the last few years.
I don't have to deal with insurance, parking (if parking is free by you, it shouldn't be), maintenance (I work on them myself, I just pay for cheap parts), and fuel is effectively free. That's all on top of the car payment for people who haven't paid off their car.
its not that they wont have $433, it is that people will be unwilling to shell out $433 for two year old device, if they have an option to renew it for a shiny new model and roll forward into another BNPL loan
I checked the price for a used iPhone 15 pro (ie. 2 year old iPhone) on ebay and it's around $400-$500. Therefore the implied depreciation of the lease is pretty fair, unlike the lowball offers you typically get for trading in a phone.
It is not rolled forward. If they don't want to pay the $433, then they don't. They return the device and the new device's lease doesn't include that $433.
It's not like a used car loan that some people have that keeps growing with each transaction (and at insane interest rates).
A refurbished iPhone 15 Pro is selling for $929 on their website right now. Trade in price for that exact model is $410. So yes they are very interested in that old phone.
I take it you’ve never purchased an Apple refurbished product? They’re in excellent condition. They do not look like 2-year used and abused trade ins. If trade-ins are going back to the refurb inventory (which I don’t know if they do) then it’s only after extensive actual refurbishment and new parts.
They’re not putting it back into a box, listing it for sale, and pocketing the difference.
They have the ability to tear the whole thing down to guts and screws. They absolutely do replace the case, glass and battery and sell as refurbished. They already do complete case swaps on their Macs.
The ones that are not in great condition get sent to third parties and sold for slightly less. But Apple will replace the screen or battery and sell them themselves as well. I've gotten Apple refurb products with minimal signs of wear.
It's still obviously making them money. How much, who's to say, likely highly variable depending on the condition of the phone. But if it didn't make them money they wouldn't do it, they're not a charity.
I'd imagine even a phone they can't fix to sell still has some value, even as scrap to them especially as the costs of every damn material that goes into any electronic device continue to soar.
And that all being said: two things can be simultaneously true at once. Leasing is a perfectly valid form of... well you can't really say ownership, acquiring goods I guess? And it also does mean Apple can now turn what may have been one-shot purchases into people who are just fine paying a monthly payment ad infinitum. And that, in turn, opens the door for keeping people on a perpetual new-phone treadmill of monthly payments that involve them never actually owning anything.
You can very easily tie this into the Samuel Vimes Boots Theory of Economics:
The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
They’re obviously making money on the whole purchase and program because they’re a business, not a charity.
The assumption that they’re making significantly more money on this than direct sales may or may not hold. It could be that they’re targeting a similar level of end-to-end profit as direct sales but using this to expand their market by providing more purchasing options.
Some people get angry at the prospect of a company making money, but they’re not charities. Everyone should do the math and decide which purchase options work for them. What works for you may not be appropriate to force on to the rest of the population.
Since the days of Samuel Vimes, durable goods have undergone spectacular deflation and health care, housing, and education have undergone spectacular inflation.
> A lot of people aren’t going to have that $433 at the end of the lease to purchase the device outright
If someone can’t plan ahead 2 years for a $433 expense, they definitely should not have a top of the line iPhone. When my income was low I had an iPhone SE that cost $329.
If everyone was as rational as you, Americans wouldn't be living in debt that most cannot afford. Most Indians have a healthy fear of debt, and that is why the iPhone doesn't have a larger share of the mobile phone market here as it really is unaffordable to most Indians (as it is for many in America). Americans however have accepted debt as a normal part of their lifestyle. When a rich man says poor people shouldn't be ordering food through Door Dash, it sounds very cynical but there is a basis of truth in it that some poor people really do not know how to manage their finances.
Let's suppose that Apple somehow doesn't release any new iPhones during this leasing window, what happens then? Does Apple ship you back a new phone that's essentially the same model? I know this is unlikely, but I am curious.
The other thing to consider, that while Apple might sell you the phone for $400 or whatever, they might re-sell it as refurbished for $700.
It feels like there’s a psychological component here for you to feel obliged to upgrade at the end of the 2 or 3 year term. Who wants to pay $1k for a 3 year old MacBook? Trading in/up will feel natural. It does feel less and less like you own the hardware though.
You literally don’t own the hardware, it’s a lease.
That said, you can purchase with financing with an Apple Card, or with numerous other financing options like carrier financing. However, leasing allows the purchase prices of phones to continue climbing while still presenting a palatable monthly payment.
I think what’s going to happen with this is a lot of people will be lured in with low payments and then be surprised with the ending “keep your phone” payment, where it will feel like it makes more sense to just get the new phone and continue the same payments.
Paying a $400 payment on a 2 year iPhone will look insane as that’s the depreciated value of a 2 year old phone.
Or, they can still pay the $400 and try to resell it for higher. And then buy a cheaper Android when they finally realise being in debt for making a fashion statement is stupid.
That I could see, I guess the question comes down to how often to people upgrade. That comes down to discipline.
Is a 3 year upgrade cycle for a MacBook Pro unreasonable? Would you get a lower spec machine since you were not trying to maximize the life of the machine? I know I always tend to overspec my machine to keep it for as long as possible.
My M3 MBP with 36GB of ram (looks like it was about 2500 3 years ago) would get me $945 in trade in credit. May be able to get more on eBay but I can't argue with just doing trade in is easier. A bit less than I would "save" by just upgrading at the end of the lease and this already is not the base model so the number does shift.
Especially when I look at the payment options right now I could finance that MBP about $250 on my Apple Card for 12 months no interest, or $57.99 for 36 months. and then I get a new one.
Would probably depend on what it is I was doing with the machine, am I doing tasks that would actually benefit from better and better machines like video editing and similar tasks or am I just using my computer fairly basic in a way that even an M1 machine still handles just fine.
> Is a 3 year upgrade cycle for a MacBook Pro unreasonable?
For a personal machine? Yes that’s something I see as unreasonable, MacBook Pros have a very long lifespan. M1 laptop are still pretty awesome machines. For a business an upgrade every 3 years could make sense
I still use a 16GB MacBook Air for all my development and simulation work (4P+4E+8GPU cores). Even wrote my own Metal gpu code to offload part of the simulation workflow. Modded the MacBook Air with thermal pads and a homemade cooling pad made from cardboard and a usb fan to limit throttling. I’ve run simulations for over 24 hours and kept temps below 90C successfully. A newer Mac mini would be better, but those are so expensive now.
I have an M1 Pro with 32GB of RAM and am hoping to make it through the rampocalypse. This may be my longest upgrade cycle, but fortunately the machine is fast enough for most things including LLMs.
I mean we are talking about the "Pro" machine. I think there is likely an argument to be made that if you are not doing a task that would genuinely improve with more powerful hardware do you actually need the Pro machine and you could instead go with a MacBook Air that you keep for far longer since your doing basic tasks. I do think there is still some ideas of the pro vs the Air that we are still stuck with from the Intel days.
Is that threshold for using a Pro machine 3 years, I don't know probably not for most people. My M3 Pro from almost 3 years ago is still running beautifully. I could make the argument that more power would benefit what I do with this machine without a doubt, is it worth the upgrade? I don't know, but I would be lying if I have not been thinking about it.
But I also think about the mentality I had when I bought this machine, and the mentality I had when I was looking at possible upgrades just a few weeks ago. Possibly paying more to overspec the machine compared to my current use case assuming that I want to continue to use it in 3 to 4 years.
I don't know if that calculation is necessary as cut as dry.
> do you actually need the Pro machine and you could instead go with a MacBook Air that you keep for far longer since your doing basic tasks
This is probably the case for a lot of people, but Apple is smart with their lineup and there are several what I'd call "not pro" features that are gated by the MBP (and iPad pro) which is unfortunate.
Primarily, 120hz screen, SD card reader, HDMI port. None of those are really "pro" featuers, they're just basics I'd expect on any premium laptop.
That being said, 3 years is a tad on the aggressive side for an upgrade cycle for a laptop. I just upgraded my M1 last year, and this M4 Pro will easily last a year or two longer before I feel a compelling need to upgrade, outside of getting RAM constrained. Use case is photo+video production. So for me, a 5 year cycle would be about right.
But also depends on how you spec it out. If you are just buying the base model, then 3 years makes sense. If you spend extra to max it out, you'll be able to hold onto it for 6+ years.
Is that terrible though? You're saving $1000 on a 2/3 year cadence. I'm not a fan of the one size must fit all mentality, and that the one size is the conception that we must all run every piece of he into the ground before replacing it.
I also wonder whether this leasing thing is also a covert way to get people to be subject to more tracking. If you own a device you have a legal right to do anything to it you want, including jailbreak it or install your own OS that executes things differently. If you lease it you don't necessarily have that right since you are only leasing the rights to use it, not modify it.
> my guess is that they are hoping that most people just will send in the device and upgrade.
That's precisely why they set it up this way, honestly leasing always made more sense for businesses. I prefer to keep my phones, peace of mind knowing, if I lose something that somehow did not make it to the backups, I can just turn on my old phone and find it.
If I were good at financial math (which I'm not), I would calculate that against a regular loan. E.g., how high would the interest be, if you were to keep the device.
It's not common (I think average upgrade cycle on iPhone is a little more than 3 1/2 years now, and getting longer every cycle) but it's not unheard of. The iPhone hold value well enough that you can often trade it in at something like a $200 discount and just get the new one.
Considering the cost of a battery replacement, it's not the worst value proposition in the world.
Are there any “gotchas” of leasing vs owning the device? Do your rights to the data change? Does your responsibility to maintain the fit and function of the device change? How does lease vs buy benefit the consumer?
It’s a forcing function for an upgrade. You pay 75% of the cost of the device for each 2 year cycle and many people will keep doing that in perpetuity. Compared to someone that keeps their phone for 6-7 years, the leasee will pay 3x as much over that 6 year period. Apple will also get the phone back and resell the refurbished one for 50% of its original price.
Apple will benefit in two ways. They will make 125% of what they used to make on every phone they sold because they can sell it twice and more people will be forced into the two year upgrade cycle (because they can’t afford the buyout at the end) increasing their overall sales numbers in general. If you’re a consumer, you should just treat this as a 24 month interest free loan and then buy the phone outright at the end of that period. If you put the outright cost of the phone into a bond (say 7.5%) during that period, you will even get 3 months payment free and only pay for 21 out of those 24 months.
If I am reading the FAQ here properly: https://www.apple.com/shop/apple-upgrade.
> If you decide to buy the device, the purchase option fee is the list price minus any lease payments you’ve made minus any remaining discounts or trade-in credit. (excluding tax and any damage fees).
Lets look at a couple examples:
iPhone 17 pro max would be $1199 to buy (~1273 with tax) or $34.99 for 24 months totaling $839.76. So would cost 433.33 at the end of the lease to keep it
The cheapest 16" MBP would be 2,999 to buy (3186.44 with tax) or $57.99 for 36 months (or 80.99 for 24 months). 2087.64 or 1943.76. So around ~1k to buy it at the end.
It looks like you can keep making payments for 6 months to lower the buyout price a little bit.
So worst case scenario this is a 3 and a half year interest free loan with a higher payment at the end.
Seems not terrible? As long as you treat it as a loan and not a lease you can end at any point it seems fine and nothing really shady about it. You still have the option to own the device for the original cost.
Other than the loss of the iPhone upgrade program and the yearly upgrades, am I missing something here? I guess the biggest thing is you likely can't just pay it off and be done with it if you had the money.