Taking control away from mobile phone carriers, Apple is now offering its own payment plan that allows users to upgrade their phone with every yearly iteration. Similar to the new fast-track upgrade options from cellphone carriers, this new step from Apple is a flexible alternative for those who don't want to be locked into a standard 2-year contract. Officially called the iPhone Upgrade Program, the new system will be a huge game changer for iPhone users.
How It Works
Essentially, those who choose to partake in the program are forgoing the payment plan offered by carriers. Usually, carriers offset the initial price of the iPhone by spreading its costs throughout a 2-year contract. The standard contract has been in place since the very first iPhone. Nowadays, many carriers are offering a faster way to upgrade. With these plans, users pay a monthly fee for the phone and trade it in for a new one after a year. The new iPhone Upgrade Program is basically the same thing, except the contract is through Apple.
No Down Payment
The biggest perk to the program is the ability to get any iPhone desired without having to make a down payment. This is great for those who want to get the most expensive option, the 128 GB iPhone 6s Plus, without having to shell out almost $1000. Usually, carriers sell the iPhone for a subsidized price in addition to spreading out the rest of the costs throughout a contract. With the iPhone Upgrade Program, there is no subsidized price. The only thing that needs to be paid upfront is the first installment payment. This is the same amount that will need to be paid throughout the life of the plan.
The cost of the phone is spread out over a 24-period. The amount to be paid each month varies based on the model chosen. Monthly payment amounts are as follows:
iPhone 6s 16 GB: $32.41
iPhone 6s 64 GB: $36.58
iPhone 6s 128 GB: $40.75
iPhone 6s Plus 16 GB: $36.58
iPhone 6s Plus 64 GB: $40.75
iPhone 6s Plus 128 GB: $44.91
Upgrading to a New Model
While the cost of the iPhone is paid for after 24 months, users can upgrade after 12 months. If they choose to do so, they will trade in their current iPhone for the newer model. The phone will be evaluated to ensure that it is in good condition. The new model they receive will be equivalent to the one they traded in. For example, a 128 GB model will be traded for the new 128 GB model. A new 24-month contract will also be signed during an upgrade.
Keeping the iPhone Instead of Upgrading
Users don't have to upgrade after 12 months. If they decide that they want to keep the phone, they can continue to make payments until it is paid off. This makes the program a great option for those who simply want to finance a new iPhone. There's no requirement to upgrade.
While most would go directly to the Apple website to sign up, they'll find that they can only set up an appointment. This is because the sign-up process must be done in person at an Apple store. The website will only allow people to set up an appointment with an Apple Genius. There, an application must be filled out. There's no guarantee that a user will be accepted. There are a number of requirements to be eligible for the program.
The iPhone Upgrade Program is only available for U.S. residents at this time. In fact, applicants will need to present a U.S.-based credit card to be eligible for the program. The first installment payment will be charged to the credit card at the time of sign-up. They'll also have to show creditworthiness, as the program is essentially an installment loan. Financing is done by Citizens One. An applicant will have to satisfy their credit requirement to be eligible for the program as well.
The Extra Perks of AppleCare+
One big advantage of the iPhone Upgrade Program is the addition of extended AppleCare. AppleCare covers newer iPhones for a limited period of time after purchase. Usually, additional coverage will have to be purchased. However, AppleCare is part of the monthly payment plan and extends coverage for the duration of the 2-year period.
AppleCare covers hardware repair and software issues. It also covers 2 accidents that damage the phone. This can be a huge benefit to many owners. The accidents cover everything from screen cracks from falls to liquid damage. With AppleCare coverage, users won't have to pay for the full price of the phone to replace it. Instead, they will only have to pay a service charge.
AppleCare doesn't just cover the iPhone itself. It also covers any internal parts, such as the battery. With Apple's issues in the past concerning iPhone batteries, this is a great way for users to renew their battery life if it fails. It also covers the EarPods and charging cables. Lightning cables are notorious for faltering. Many users end up purchasing new third-party cables. With AppleCare coverage, users can get new lightning cables free of charge. Issues with the phone's software and Apple-made apps are also covered.
While the addition of AppleCare would lead many to believe repairs are free, that's not the case. Phones that need repair are still subject to a $99 service fee. Fortunately, this would be the only thing that would need to be paid for should the iPhone need a complete replacement. Even completely destroyed phones would be replaced for a mere $99 instead of the full purchase price. It should be noted that AppleCare doesn't cover lost or stolen phones. Users who experience this would need to pay full price for a replacement.
Is an Early Upgrade Possible?
The 12-month cycle of upgrading can prove to be an inconvenience to those who don't sign up for the upgrade program exactly when the new iPhone comes out. This is due to the 12-month upgrade requirement. Half of the iPhone must be paid off before it can be upgraded. However, there is a way around this.
After 6 months of payments, users will be able to make larger payments to make up the difference. They can do this by making a large payment equivalent to the 6-month amount or simply increase their monthly payments. Either way, this allows users who sign up for the program late to still upgrade on time. As long as they pay the 12-months worth of payments, they can upgrade early.
Trade in Condition
Because the iPhone is technically leased, it must be in a certain condition during trade in. Phones in a less than desirable condition can be rejected. If this occurs, users will have to either continue paying off the phone or have it repaired. With AppleCare, phones can be fixed for a service fee. However, users who have already used their 2 covered accidents will have to pay an Apple Authorized service charge for repair, which is considerably more. To be considered in good condition, the phone must:
Turn on and charge
Have a perfect display with no issues
Have no major cosmetic issues like cracks
Have Activation Lock disabled
Can the Plan Be Canceled?
The iPhone Upgrade Program can be canceled at any time. However, users wanting to cancel will have to cover the cost of the phone beforehand. Like other loans, it'll have to be paid in full.
If a phone is traded in for an upgrade, the upgraded phone can be returned. However, the iPhone that was traded in won't be returned. This is because the device wasn't paid in full and a new contract was signed. The new contract can be terminated, but the newer device will still need to be paid in full. Apple will evaluate the phone that was traded in and determine a value. That value is then subtracted from the remaining balance on the newer phone. That remaining balance will need to be paid in full. In the event that the remaining balance is less than the value of the phone that was traded in, Apple will simply issue a gift card.
Why Sign Up For the iPhone Upgrade Program?
The upgrade program provides users with a lot of freedom. In the past, iPhones were locked to specific carriers. If someone wanted to use the device with a different carrier, they would have to unlock it. This can lead to a number of different issues. By buying the phone directly from Apple, phones aren't directly locked to a specific carrier. While Apple will have to know which carrier will be used prior to issuing the phone, it can easily be brought to another carrier without having to manually unlock it. This gives users the ability to take it to a carrier without a contract.
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