Posted by lkurtz 3 hours ago
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.
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.
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.
It’s options. You don’t have to use it.
That’s the entire point. They would have bought a cheaper phone, or held on to their old one, but are now paying perpetual monthly payments.
There’s a reason car dealerships never ask “how much can you afford”, but “how much do you want to pay every month”.
There’s a reason Klarna is running the program for them.
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.
most people live on credit cards as bridge finance between paychecks. when I mean most people - I mean 50% of the population.
But they're not actually interest in owning 2 year old phones though right?
They're just interest in you / 2ndary market not owning any?
They’re not putting it back into a box, listing it for sale, and pocketing the difference.
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.
One month of median US rent buys three 55" TVs.
The math has changed.
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.
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.
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.
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.
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
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.
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.
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.
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.
Considering the cost of a battery replacement, it's not the worst value proposition in the world.
With hardware prices increasing, selling financially challenged people on 'cheap' monthly payments seem like one way to keep the stock price pumped at these levels.
I guess they are one of the good trillion corporations though?
https://finance.yahoo.com/technology/article/apple-tops-5-tr...
I had a friend who bought a new Mac every year, selling his old Mac. His calculation was that it was about the same price as keeping one Mac and upgrading every 5 years.
I'd consider leasing a Mac through this program. I priced one out, with the options I chose it's $8149, lease for $177 (6372 for 3yrs, 8496 for 4yrs).
Yes, at the end of those 3 years I don't have a mac, I have to keep paying, but I'd prefer a new Mac every 3yrs and it's just easier than trying to sell it for $1777. It doesn't seem like a bad deal to me, plenty of people lease cars. Plus, if you consider you can keep your moneny in interest earning account, then at 3% you'd end up with $2256
I'm not saying that makes it a good deal for you, but I personally like the idea of not paying out $8149 day one, especially for something I know has a shelf life. I'm on an 2021 M1 Mac. It works great. But I've also tried to run 70b LLMs and run out of memory (64g), so I think about upgrading to 128g which, being Apple, I can only do by buying a new mac.
Companies that require frequent hardware refreshes would benefit from this, though Apple already had has programs for those.
Isn't it this:
>> His calculation was that it was about the same price as keeping one Mac and upgrading every 5 years.
It’s not just a 1 year program.
The comment you replied to had numbers for the 4 year option.
Damn, this is the dealbreaker for me.
Leasing an unlocked iPhone and being able to use my current $25/mo MVNO of choice (US Mobile) may have actually tempted me (I currently buy outright and then tell myself I'll sell my current phone when I upgrade, but in reality I just have iPhone graveyard at home.)
I know a lot of people use postpaid, but I can't understand why. I'd challenge anyone to justify that decision, given that the phone "deals" are rarely even much of a subsidy as opposed to a financing scheme that acts as a contract, and the plans cost about triple what I pay every month, for fewer features and equivalent at best priority and speeds.
[1] https://9to5mac.com/2023/06/15/apple-card-financing-sim-free...
I subscribe to /r/NoContract/ so I have a pretty good idea what's out there.
Visible+ is a comparable pre-paid plan, it's $29/mo but that's a teaser rate and to keep it past one year, you'd have to port out and port back in for whatever deal they have in one year. The normal price is $35/mo, so I'm beating that. (Visible would also mean managing 4 separate accounts since they have no multi-line plans.)
Total Wireless is a bit cheaper ($26/mo) but I keep reading terrifying customer service issues with them including most recently losing number during the porting process.
Aside, I briefly used US Mobile earlier this year to port a VoIP line to Google Voice (GV will only port-in mobile numbers). US Mobile's customer service is exceptional. Would recommend them heartily for pre-paid service. But they don't currently beat what I'm getting from Verizon post-paid. I'd consider them if I can't keep my loyalty discounts next year.
Another thing to note about Visible+ is that if you have an Apple Watch with cellular and want to use that with your plan there is absolutely no reason to consider Visible+.
Watch support can be added for $10/mo but that brings the total to the same as their highest level plan, Visible+ Pro, which includes watch support. That plan is $45/mo $450/year ($37.50/mo) and promotional discounts run out.
As far as I was able to tell, Visible+ Pro is the best or very close to the best deal for people who want Apple Watch support in the US and only want one line. You can get lower prices per line on postpaid plans with multiple lines but if you will only have one the postpaid plans are ridiculous (even before you add in watch support).
It is hard to get eSIM to work, but they have good customer service (but you need accses to a phone to call them, so you should try something like textnow or Google Voice) which helped my friend set it up.
It is not a intruductory offers, AFIK.
I check with people that come around or in random stores if they can beat it, alas they cannot.
Still, thanks for pointing it out.
Two reasons: data caps and device cost.
People want iPhones but they cost $1000 outright which isn't a small amount of cash these days so they roll the cost of the device into their monthly bill. The average consumer also doesn't understand how mobile data versus 802.11 works - their kid doesn't activate Wi-Fi on their phone or download anything, they see a large number with "GB" on the end, and they pay whatever is necessary to keep the Instagram scrolling and Disney+ flowing.
Buying an iPhone outright, flipping the old one every few years (they hold their value well) and using a $30 a month 10GB plan is doable if you have money and are savvy enough to download podcasts and use your home's AP for data.
Carriers certainly aren't incentivized to educate consumers better since they'd rather make money on device installments and milk them for hundreds of dollars a month because they "have a large family and need a lot of data". Home broadband marketing is even worse - why a family of four "needs" 500 Mbps down is absolutely beyond me. In an ideal society this type of consumer literacy would be taught in school but I'm not holding my breath.
> Financing available to qualified customers, subject to credit approval and credit limit, and requires you to select Citizens One Apple iPhone Payments or Apple Card Monthly Installments (ACMI) as your payment type at checkout at Apple. In order to buy an iPhone with ACMI, you must select one of the following carriers (but you cannot use a prepaid carrier plan): AT&T, T-Mobile, or Verizon. An iPhone purchased with ACMI is always unlocked, so you can switch carriers at any time, subject to your carrier’s terms.
Instead of automatically owning the device after making all payments, you can choose return/upgrade/buy it at the end of the lease. The new program is backed by Klarna instead of Citizens Bank, uses a soft credit check, and no longer includes AppleCare+ by default.
The fact that the page is not particularly clear about any of this should tell you everything you need to know about this change.
On the one hand that gives users an option.
On the other hand, that is a way to hide a price increase. Also, those doing this are almost obliged to take AppleCare, as (https://www.apple.com/shop/apple-upgrade):
“What do I do if my device gets lost or is stolen?
If you have AppleCare+ Theft and Loss for your iPhone, iPad, or Apple Watch, you can file a claim at mysupport.apple.com/theftandloss.
If you don't have AppleCare+ Theft and Loss coverage and your device is stolen or lost, you'll need to close out your lease by paying the early termination fee or choose to pay the purchase option fee (plus any applicable taxes and fees). You can do that at an Apple Store, or through the Klarna app. You can then start a new lease with Apple Upgrade, finance with Apple, or buy your next device with a one-time payment.
You will continue to be charged your monthly lease payments until you either pay the early termination fee or purchase option fee. If you take no action, Klarna will continue to charge you your monthly lease payment through the extension period, and you will be charged the purchase option fee through Klarna.”
Looks like a recession indicator to me.
You'll own nothing and you'll feel weird about it.
Why haven't I upgraded? Because there's no mini and all they make are phablets now.
They’re discontinuing this and replacing it with Apple Upgrade, which is structured as a lease. Apple owns the device and you make payments. You either return the device or buy it out at the end.
The distinction probably doesn’t matter much to the typical consumer, other than the final price differences. Some people have an emotional attachment to knowing they own the phone instead of leasing it (I’m emotionally attached to this position, however illogical) but in the end it comes down to having a device in your hand for a monthly payment.