When it comes to buying a premium smartphone like the iPhone, a lot of people in the US till today prefer getting it financed through a wireless carrier and paying in monthly installments over a span of 1 or 2 years. However, with Apple’s recent launch of Apple Upgrade, the way consumers own their devices could change.
Under this program, released in partnership with Klarna, consumers can lease Apple devices like iPhones, Macs, watches, and iPads for 2 to 3 years. But it’s important to note that iPhones can be leased only for 24 months, while other devices can be leased for longer.
Leasing prices start as low as $18 for iPhones, and at the end of the leasing term, customers can upgrade to the latest generation phone, purchase the leased phone by paying the remaining amount, or return the device and exit the program. Also, there are no fees associated with the monthly lease payments.
While the numbers seem tempting, the bigger question to consider is: after 2 years, which can offer you a better value – leasing an iPhone through Apple or buying it and later selling through a buyback platform?
Let’s do the math to understand better
For a clearer picture, here we have taken one iPhone model and compared the cost of leasing with what one could recover after owning it for 2 years and selling through a buyback platform.
Please note that we have rounded off the numbers for readability.
Option 1: Lease through Apple Upgrade
If you select a mist blue iPhone 17 with 256 GB storage and have nothing to trade in, Apple allows you to lease it for $23 per month for 24 months. The point to note here is that you have to purchase AppleCare+ separately as it is not included in the lease program, which can cost you around 12 dollars a month.
Lease: $23 X 24 months = $552
AppleCare+: $12 X 24 months = $288
Total 2-year cost of leasing: $552 + $288 = $840
So, if you lease an iPhone with AppleCare+ for 2 years, you approximately spend $840.
Option 2: If you purchase and sell iPhone 17
Purchase Price: $800
Estimated Resale Value in 24 months: Approximately $305. (Based on Cashmycell depreciation calculator: the phone’s current value is $575 and its 12-month estimated value is $440, which means it has depreciated by $135. Assuming the same depreciation over the next year, the 24-month estimated value is $305)
AppleCare+: $12 X 24 months = $288
Estimated Resale Value after 24 months: $305
Approximate 2-year cost of buying iPhone 17: $800 + $288 – $305 = $783
After comparing both options, we can see that while the 2-year cost is more or less similar, buying gives you a noteworthy advantage: you recover an estimated amount of $305 when you resell, which is a huge benefit and does not happen in the leasing option.
Note: This $305 resale value is based on Cashmycell’s depreciation calculator and does not guarantee the exact same buyback offer in the future.
Now, what if you want to keep it for 3 years?
So far we have compared the cost of leasing vs. buying and selling the iPhone after two years. But what if you want to keep your phone for longer, let’s say 3 years. Apple doesn’t allow you to lease iPhones for more than 2 years, but buying does give you the option to keep it for as long as you want.
To estimate how much iPhone 17 could be worth after three years, we can look at Cashmycell’s data for the iPhone 15, which has been on the market for 3 years.
Launched in 2023 at $900, the 256GB iPhone 15 currently holds the estimated value of $331, after three years. This means it has depreciated by approximately 63%. Now if we apply the same depreciation rate to iPhone 17’s $800 MSRP, we come to the conclusion that the resale value of iPhone 17 after 3 years might be approximately $296 ($800 x 37%).
This is only $9 lower than the estimated resale value after 2 years, suggesting that consumers could still recover a significant portion of the phone's value even after 3 years. This amount can then be put towards their next upgrade, an option that isn't available with leasing.
The bottom line
Ultimately, both options come with their own set of benefits. It all boils down to the priorities of the consumers. Apple Upgrade offers numerous advantages such as no fees on regular monthly lease payments, and the option to upgrade, return, and purchase the device at the end of the leasing period.
However, buying gives ownership from day one and the benefit of recovering a part of the purchase price at the time of reselling. Using Cashmycell’s depreciation calculator, we found that a consumer can recover $305 if they sell their iPhone 17 after 2 years – something they don’t receive if they simply return the leased phone. Plus, while the iPhone lease period is limited to 24 months, buying gives consumers the flexibility to keep their phones for longer and still recover some value when they sell them.
So, if convenience and low monthly payments are your priorities, Apple Upgrade may be a better option for you. But if your aim is to maximize the value of your smartphone, buying and selling when its resale value is strong on a buyback platform can be a more suitable option for you.
FAQs
1. What is the Apple Upgrade program?
Apple Upgrade is a leasing program launched in partnership with Klarna, that allows consumers to lease iPhones for 2 years, and other Apple devices for up to 3 years, with iPhone plans starting at $18 per month. At the end of the program, consumers can choose to upgrade, buy the device, or return it.
2. Does Apple charge any additional fees, and does it include AppleCare?
Apple Upgrade does not charge additional fees on the regular monthly lease payments. However, you have to purchase AppleCare separately as it is not included in the lease program, which can cost you around 12 dollars a month.
3. How much can I recover by selling an iPhone after 2 years?
The resale value varies by model, condition, storage, and various other factors. However, using Cashmycell’s depreciation calculator, we found that a consumer can recover $305 if they sell their iPhone 17 after 2 years. But please note that here $305 is an estimated resale value, and does not guarantee the exact same buyback offer in the future.
4. Can I use Cashmycell’s calculator when planning to buy and sell an iPhone?
Definitely. Knowing how much your phone has depreciated can help you decide whether it’s the right time to sell or if waiting a little longer makes more sense. Doing so can also help you understand how much you can recover from your current phone and put towards buying your next iPhone.