Comment by paxys
9 hours ago
> 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.
It’s options. You don’t have to use it.
> 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.
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.
What if I don’t want to “own my phone”?
Look, I have one camera with me and one child. As long as the camera gets better every year, I’m gonna want a better camera, every year. I don’t want to deal with carriers and trade-in shopping. Unfortunately this particular deal sucks compared tot he old one.
I’m not financially irresponsible. I value these devices highly and value my time.
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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.
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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.
It's also a good deal if you want to keep the phone for 8 years. Just make sure you take the buy option.
Why on earth are we leasing phones now???
> Why on earth are we leasing phones now???
Same reason some people lease cars:
* want the New Thing regularly
* are happier with OpEx than CapEx (can be handy for business/accounting reasons)
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Well, lets do math:
- 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.
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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.)
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That’s tame when people are leasing literal meals with klarna
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money number must go up?
> 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.
Are you seriously arguing that Apple is doing this so they don’t have to keep making devices any better? I just want to be very clear about this.
That gets it backwards. They're not doing this because they want to make devices that are less compelling purchases, but they are aware that their coming pipeline will in general not as be compelling to potential upgraders as in the past. This is largely because the category has matured, and people don't feel the need to upgrade nearly as often as 5-10 years ago.
By getting people to be default-subscribers rather than purchasers who may decide to upgrade, they improve their odds of keeping a larger chunk of their hardware revenue stream.
Someone who won't have that $433 has no business even thinking about a 1200$ phone in the first place
you overestimate the financial health of most Americans.
most people live on credit cards as bridge finance between paychecks. when I mean most people - I mean 50% of the population.
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.
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>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
https://www.federalreserve.gov/econres/scf/dataviz/scf/chart...
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And those people never get to a point where they save anything, renting, leasing, pay as you go, credit cards, reverse mortgages are a losing game the house always wins.
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.
- written on my S10
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Have you met…America?
wait till you see what people do with car payments
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.
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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 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 also charge heavy interest and fees to people who miss payments, but in this case that will be captured by Klarna.
Klarna does not charge interest or fees to people who miss payments.
Yes, and for most of those retailers I mentioned the financing is handled by e.g. Synchrony Bank.
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.
I just bought a 1 year old iPhone 16 on Facebook marketplace for $400. You can find pretty good prices if you don't need the latest device.
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> roll forward into another BNPL loan
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).
>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.
> while keeping ownership of the asset at the end.
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?
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.
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Have to milk the economic tit for all it’s worth.
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.
It doesn't get "rolled in," since you don't have to transfer any liability to the next lease.
I would have thought this was about Tax. I'm sure its different in every country, but I believe a lease is very different to purchasing hardware.
> 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.
This is not why Americans are in debt. If you really think this you understand so little.
That rich man was born into wealth, so he has no concept of the lives of poor people.
Most people don’t take a personal finance class and they also don’t plan ahead short term thinking is the norm and that percentage is over 50% of the population.
Well there’s a reason Americans have $1.25 trillion in credit card debt.
Now let's count their mortgage debt.
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.