Apple first launched its in-store device payment plan, the iPhone Upgrade Program, with the release of the iPhone 6s two years ago.
The program is still going strong, so if you're looking for a carrier-free way to get your hands on the iPhone 8 or 8 Plus, here’s everything you should know about Apple’s upgrade option.
Apple's iPhone Upgrade Program
How it works: When you purchase the iPhone through Apple you are offered the iPhone Upgrade program which allows you to pay off the iPhone through a third party financing deal. You are effectively getting an interest free loan from Citizens Bank. Payments start at $32/mo which is slightly more expensive than the carrier's own financing / installment plans.
- You can upgrade to a new iPhone after making 12 payments on the device (or sooner as long as the equivalent of 12 monthly lease payments has been made)
- This financing is via Citizens One
- The full cost of your phone is spread out over 24 months with 0% interest
- AppleCare+ coverage is required which is bundled in the price
Beware of this:
- This is approximately 20% more expensive than buying on a carrier (carrier's charge $29/mo for the iPhone 8 64GB whereas as Apple is charging $345/mo). However Apple's program includes AppleCare+ in the monthly price
- Device can only be activated at AT&T, Verizon, Sprint or T-Mobile at time of purchase (this program can't be used for small carriers like Cricket, MetroPCS or Ting).
- You can only do this in an Apple store.
iPhone Upgrade Program monthly payments
|iPhone 8||iPhone 8 Plus|
If you decide not to upgrade to a new iPhone at the one-year mark, you can continue to make the next twelve months of payments and your two-year agreement will expire; your iPhone is then fully paid off and yours to keep, sell or trade in for a different plan elsewhere.
How the program works
Customers can register either online when ordering their iPhone, or at their nearest Apple Store - be aware, however, that you may need to make an appointment for in-store purchases.
Once you’re set up, you will pay your set monthly amount each month over the next year, after which you can trade up to the newer equivalent iPhone at any time. So if you’ve purchased the iPhone 8 64GB, you can switch next year to the 2018 iPhone in the 64GB storage size.
You’ll need to hand Apple back your current iPhone in order to upgrade, and then sign a brand-new 24-month upgrade program agreement to begin the process again.
If you have an existing device you'd like to trade in for your new iPhone when signing up, Apple will credit you for the trade-in cost of your old handset. This will be applied to your credit card if you're signing up in-store, or be sent to you as an Apple gift card if you register for the upgrade program online.
The Upgrade Program includes complimentary AppleCare+ coverage, which gives you extended protection for your iPhone over the life of your payments.
You’ll be covered for hardware repairs, software support and up to two separate incidents of accidental damage to your device, including screen damage, damage related to accidental drops, and liquid damage.
The plan covers the iPhone itself, your device’s battery, included accessories such as EarPods and charging cables, as well as problems with your device’s software (iOS and iCloud) and Apple-made apps. You’ll also get support for issues relating to your phone’s WiFi connection.
If you purchased AppleCare+ separately for your iPhone 7 or 7 Plus, you’d be looking at a $129 payment for two years of coverage. Under the iPhone Upgrade Program, this amount is spread out over your 24 monthly payments.
So if you're paying $32.41 each month for the 32GB iPhone 7, around $5.30 of that payment goes towards your AppleCare warranty.
The cons of AppleCare+
Of course, there are conditions. As mentioned above, you only get two cases of physical damage covered by AppleCare+, and even then it’s not free. Submitting your phone for repair comes with a $99 service fee, as well as any other applicable taxes.
While you’re covered for malfunctioning software and damaged hardware, Apple warranties don’t cover replacement or reimbursement for lost or stolen phones. That’s something that needs to be covered separately, through a carrier or third-party insurance plan.
What you need to know
Assuming you don’t upgrade, your phone will be paid off after the full two years of payments. If you want to upgrade earlier than the twelve-month period, you have the option of making advance payments at the six-month mark in order to have paid off the equivalent of twelve repayments. Paying off half your total iPhone balance (and any fees and taxes) means you can upgrade at any time after six months of payments.
Canceling your upgrade plan
If you’re on a financing or upgrade plan with a carrier and decide to terminate your contract early, you’ll be required to make the remaining payments in a lump sum before you can leave. Apple's terms and conditions outline a similar policy for canceling your loan or returning your iPhone.
If you upgrade to a new handset by trading in your old iPhone, and then later decide to return the new device to Apple, you won't get your traded-in smartphone back. Your loan will be terminated (and your AppleCare+ coverage), but you'll be required to pay Apple the difference between the trade-in value of your older iPhone, and any payments you have left on the new device.
So while you may not have to pay off the remaining installment payments completely, you will need to make a final payment to Apple to get out of your upgrade program contract - and you won't get your traded-in device back. But there's good news: in the event that you've paid off more than your trade-in device is worth, Apple will issue a Gift Card for the surplus amount.
Buying your iPhone from Apple gives you slightly more freedom than picking it up from a carrier, as it will come network unlocked and can be taken straight to a no-contract, bring-your-own-device cell plan. But because of differences in technology, you’ll need to tell Apple your intended carrier at the time of purchase, and iPhones compatible with AT&T and T-Mobile may not work on Verizon or Sprint plans (and vice versa).
What about carrier upgrade plans?
If you’re set on an early upgrade plan and consider extended device protection essential, the iPhone Upgrade Program may be perfect for you.
But make sure you check out carrier pricing for the iPhone 8 and 8 Plus before making a commitment - as these options don't include the cost of insurance, you'll actually pay less in total for your iPhone.
Leases and early upgrades
If you’re looking to pay less each month, and don't care about AppleCare, carrier installment plans - including early upgrades and leases - may be a cheaper option.
You won’t get AppleCare+, but you may get an overall lower price for your phone (not including your plan payments, any line access fees, and any other add-ons you opt for). But your iPhone will be locked to a network until you fulfil all your repayment obligations.