Apple Drops Zero Percent Financing in Canada

Apple Saint Catherine Montreal retail store Credit: Apple Sainte-Catherine, Montreal
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In another example of why Apple’s financial initiatives need to expand beyond US borders, the company has just dropped interest-free product financing in Canada — one of the few other countries where it offered such plans.

In the US, Apple now handles the majority of its own financing arrangements through the Apple Card, offering cardholders an interest-free 24-month installment plan for iPhone purchases, plus similar terms for other products. Apple recently made some slight changes to the program, requiring new iPhones to be activated on a carrier and shortening the Apple Watch installment term to 12 months, it’s still a great deal if you’re looking to pick up a new Apple device.

Sadly, even four years after its launch, the Apple Card has yet to make its way outside of the US. Apple and its partner, Goldman Sachs, have been making plans for years, but working out financial arrangements in other countries is complicated, so it may be another four years or more before that happens. Other Apple financial services such as Apple Cash, Apple Pay Later, and the Apple Card Savings Account will also likely remain US-only for the foreseeable future.

Meanwhile, Apple is forced to partner with third-party financing companies in other countries if it wants to offer any buy-now-pay-later (BNPL) programs. In Canada, that partner is Affirm, and it appears that whatever arrangement the two companies had for zero-percent financing has just expired.

As discovered by some folks on Reddit, Apple’s Canadian Financing page now shows interest rates of 7.99% for iPhone purchases and 4.99% for Macs and iPads. Financing runs over the same 24-month period, which means that a customer in Canada who wants to purchase a $1,099 iPhone 14 will pay an extra $93.79 over two years, for a total of $1,192.79.

Since Affirm exists to make money through interest rates, it’s unlikely it was offering zero-percent financing out of the goodness of its corporate heart. Most likely, Apple had made an arrangement to cover the financing charges to encourage more customers to purchase devices from Apple Stores.

Apple is technically doing the same thing with the Apple Card in the US, with Goldman Sachs effectively forgoing interest that it could otherwise be collecting from customers. While the arrangement between the two companies isn’t public, Goldman must be getting something out of the deal.

Still, the good news is that this new Canadian arrangement isn’t likely to be a harbinger of things to come in the US, where Apple has much more direct control over the financial services it offers to its customers.

Carrier Financing in Canada

The good news for Canadian Apple customers is that the Apple Store isn’t the only game in town for financing an iPhone, iPad, or Apple Watch interest-free. All the major Canadian carriers offer interest-free financing on iPhone purchases as long as you’re willing to sign up for a 24-month term. Similar financing is also available for cellular-capable Apple Watch and iPad models — with an appropriate plan, of course.

Some carriers even offer a “Device Return Option” for the iPhone that works in much the same way as a car lease, financing only the deprecation of the iPhone over 24 months, after which the customer can buy out the residual value of the iPhone or return it to the carrier and lease or finance a new one or walk away. However, it’s still a zero-interest arrangement, and the buy-out price of the iPhone is about the same as its trade-in value after two years.

The Canadian Radio Telecommunications Commission (CRTC), which regulates the mobile carrier industry in much the same way as the FCC does in the US, also requires that all phones sold in Canada be carrier-unlocked, which means that customers who decide to buy out their iPhone at the end of their term are free to use it on another carrier of their choice without incurring any additional fees.

The advantage for the carrier is that they get customers on a 24-month term, and the leasing-style option provides an even tighter lock-in to that carrier since — again, like most car leases — you have to pay out the remainder of the 24-month term to get out of the contract, and still either buy out or return the phone. It’s easy to see why carriers happily offer zero-percent financing with terms like these.

It’s also understandable why Apple may have been eager to offer similar terms in its retail stores, offering a much simpler version of those carrier deals where customers have the freedom to sign up for any plan they want — including prepaid plans — and switch at any time without being locked into contracts.

The new financing terms in Canada are effective immediately for new purchases but won’t affect those already on an interest-free installment plan through Affirm.

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