Renters use 'rent now, pay later' services to manage monthly payments, but fees raise concerns

"So-called "rent now, pay later" services have emerged over the past few years as housing costs climb and paychecks grow less predictable, particularly for lower-income and gig-economy workers. According to the Bureau of Labor Statistics, rents have jumped nearly 28% in past five years. Companies such as Flex, Livble and, more recently, Affirm, say breaking rent into multiple payments can help renters manage cash flow."

"Kellen Johnson, 44, 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."

Rising rents and uneven paychecks have led many renters to use 'rent now, pay later' services that split monthly rent into multiple payments for a fee. Companies such as Flex, Livble and Affirm promote payment splitting as a cash-flow tool. Consumer advocates warn that the services often operate like short-term loans, adding fees and sometimes producing triple-digit effective interest rates. An example user paid $1,350 then $500 on a $1,850 rent and faced a $14.99 monthly subscription plus 1% of rent, raising his app charges to over $33. Large portions of renters pay high shares of income on rent.

Read at The Mercury News