Some renters should be wary of ‘rent now, pay later’ services. Here’s why

Rising housing costs have spurred the growth of "rent now, pay later" services, allowing renters to split payments. These services, like Flex and Livble, aim to help renters manage cash flow, particularly for those with variable income. However, consumer advocates caution these services function like short-term loans. They often include fees that can result in very high effective interest rates, potentially exacerbating financial strain. One user, Kellen Johnson, paid over $33 monthly for Flex, representing a 172% APR for part of his rent. These types of fees are concerning for about 109 million US renters, many of whom are already cost burdened. Companies pay the landlord the full rent and then collect installments, spreading out the payment for the renter. Affirm recently began testing a similar program, although it may charge landlords fees. Landlords increasingly accept credit cards, but this also often involves processing fees. Economists worry these financing options do not address affordability and could increase rents. Advocates fear that the rent market could adopt the model of credit card processing costs being passed onto customers.