A growing number of companies are now offering rent-now, pay-later plans that pay the landlord in full each month, then charge the tenant smaller amounts two or three times over the course of the month.
Companies such as Flex, Livble and, more recently, Affirm, say breaking rent into multiple payments can help renters manage cash flow. But consumer advocates warn the products typically function like short-term loans, layering fees onto already-strained budgets and, in some cases, carrying triple-digit effective interest rates — raising questions about whether they ease financial pressure or deepen it.
Launched in 2019, Flex is one of the largest companies focused on splitting rent payments. The company says its 1.5 million customers now send about $2 billion a month in rent through its system, and several of the country’s largest landlords accept Flex as a payment option.
Flex says most of its customers are lower-income renters with weaker credit profiles. The company reports a median credit score of 604 among its users and says about one in three customers works more than one job to make ends meet.
Kellen Johnson, 44, told the Associated Press he started using Flex to split up his rent payments about two years ago. Instead of paying the whole $1,850 of his rent on the first of the month, Johnson would pay $1,350 on that date, and $500 on the 15th. For the service, Flex collected a $14.99 monthly subscription fee, as well as 1% of the total rent, which for Johnson was $18.50, bringing his monthly charges for the app to more than $33.
“Renters should be skeptical of any financing providers that have partnered with a landlord and be skeptical of anything that sells itself as no fees or no interest,” said Mike Pierce, executive director of Protect Borrowers. Pierce previously worked at the Consumer Financial Protection Bureau.
