Am I misunderstanding how Apple's Upgrade Lease Program works? Suppose I trade in an iPhone 16 Pro when upgrading to an iPhone 18 Pro, bringing the lease payment down to $7.49 per month for 12 months. At the end of the lease, my understanding is that I return the phone to Klarna rather than keep it. If I then upgrade again, wouldn't I lose the trade-in value of that device, causing the next financed or lease payment to increase substantially?
3 Answers
The lower lease payment is possible because you’re only paying for the phone’s expected depreciation during the lease term, not the full purchase price. For example, if the phone costs around $1,600 and the lease payments total roughly $800, the remaining value is covered by returning the phone at the end. Since you don’t own the device after leasing it, there’s no leftover trade-in equity to apply toward the next phone.
The lease terms generally allow you to keep the phone by paying its purchase amount, calculated from the original price minus the lease payments you’ve made and any remaining trade-in credits, plus applicable taxes. If you return it at the end instead, you avoid paying that remaining balance, but you also give up the ability to use the phone as a trade-in. So your next upgrade could indeed cost more unless you buy and retain the current device.
The key distinction is ownership. Returning the phone satisfies the lease because you’ve paid for its use and depreciation, but it doesn’t leave you with an asset to trade in. To preserve trade-in value for a future upgrade, you’d need to purchase the phone rather than return it, assuming the eventual resale value makes that worthwhile.
That’s what I was trying to confirm. I wasn’t asking about ending the lease early—I meant completing the full lease term and then upgrading. Returning the phone would mean I no longer have a device with trade-in value for the next purchase.