Apple’s new plan lets you step up to a newer phone for as little as $15 a month.
Apple really, really wants you to stop using that old iPhone and to upgrade to a new one. On Thursday, the company announced the Trade Up With Installments plan, the third purchase plan customers can opt into when buying a new iPhone.
The Trade Up With Installments plan is targeted at users of the iPhone 4, 4s, 5, 5c, 5s, 6, and 6 Plus and is only available at the Apple Store. You can bring in your old iPhone and Apple will give you credit for the device, and then you can pay off the new unlocked iPhone in monthly installments.
How much will Apple give you for your old iPhone, and how much are the monthly fees? CNET has a helpful chart that lists the maximum trade-in values (the condition of the device influences the value) and your monthly payment, which varies depending on the iPhone you upgrade to. For example, if you trade in an iPhone 4 in excellent condition, you can get $100 credit in the trade-in, and if you want to upgrade to an 16GB iPhone 5s, the monthly fee is $14.58. If you pick a 128GB iPhone 6s Plus, the monthly fee is $35.37.
The monthly fee is calculated by subtracting the trade-in credit from the price of the unlocked iPhone, and then dividing that number into 24 payments. There’s no interest involved, and AppleCare+ is not included. If you want AppleCare+, you are required to pay for it up front. Also, the Trade Up With Installments plan does not allow you to upgrade to a new iPhone every 12 months. You must pay off your plan first before upgrading.
Apple will even accept certain Android and Windows phones for trade-in. The credit you receive ranges from $100 to $300.
The new plan is basically a combination of the trade-in program, where you trade in a smartphone and get credit towards a new iPhone but you have to pay off the remain balance of the iPhone in whole; and the iPhone Upgrade Program, where you pay a monthly fee and can get a new iPhone every year.
Why this matters: During Apple’s recent Q1 2016 earnings call, the company said it expects revenue to decline in the second quarter, largely due to iPhone sales slowing down. The new Trade Up With Installments plan is another way to encourage people to buy new iPhones. The number of people using old iPhones is significant; Apple CEO Tim Cook has said that 60 percent of iPhone users are not using an iPhone 6 model. That’s a huge user base than Apple would like to tap into to boost sales.