Fine print on Apple's iPhone Upgrade


The terms for Apple's new iPhone upgrade plan went live early Saturday morning. I had a bunch of questions and it looks I've got some answers. Some key points:

Early Upgrade Option. At any time six (6) months after the date of enrollment, you can become upgrade eligible by making advance payments so that you have paid the equivalent of at least twelve (12) installment payments under your Installment Loan plus any taxes and fees paid at the time of enrollment.

So, it seems you don't have to worry about timing with the upgrade plan. You just simply have to have had the phone for 6 months and pay the remaining payments up get up to 12 months.


Termination of Original Installment Loan After Exercising Upgrade Option. Upon successfully exercising your Upgrade Option and entering into a New Installment Loan with Bank as outlined above, Apple will pay any remaining balance due under your original Installment Loan on your behalf to the Bank, and Bank will consider your original Installment Loan to be paid in full.

This is the part I was most interested in knowing. Since the 24-month loan is serviced by a third party, how would the balance of the loan be handled?. It sounds like the phone ownership will transfer to Apple and Apple will take care of it, which makes things simple.

Condition of Financed iPhone when Exercising your Upgrade Option. As noted above, your Financed iPhone must be in good physical and operational condition when exercising your Upgrade Option as determined solely by Apple or Apple's trade-in service provider ("Trade-In Service Provider"). For a Financed iPhone to be considered in good physical and operational condition, the Financed iPhone must:
Power on and hold a charge;
Have an intact and functioning display;
Have no breaks or cracks; and
Have Activation Lock disabled (you may be asked to disable at the time of upgrade).

So, basically if you phone fails to meet that criteria, you'll have to exercise your $99 AppleCare+ service prior to trading in. And obviously you'll have to be able to unlock the phone (i.e. it's not stolen or you're not authorized to do so.)

So, Apple seems to be offering a pretty reasonable path to purchasing an iPhone and upgrade every year. (how swell of them!) The key part is whether you actually want to pay for AppleCare+. If you do, the advantage is you're only paying for 1 year of AppleCare, rather than two and not using the second year on that device.

Essentially the upgrade program you pay 50% of the device and use 50% of the device. If you're ambitious, you could probably do better with resell or other trade in offers. In fact, it might be interesting to see how the trade-in market responds to Apple's program on the next cycle.

The only significant downside to me is you must visit an U.S. Apple Retail Store to start this up. I'll be curious to hear back how quickly.