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

As rent prices continue to soar across the United States, a new financial trend is emerging that promises relief for cash-strapped tenants. “Rent now, pay later” services are gaining popularity, allowing renters to split their monthly housing payments into smaller installments – though consumer advocates warn these services may ultimately add to financial burdens rather than alleviate them.

According to the Bureau of Labor Statistics, rental costs have surged nearly 28% over the past five years, placing immense pressure on household budgets. This trend has created fertile ground for companies like Flex, Livble, and more recently Affirm, which market their services as solutions for managing cash flow challenges.

For Kellen Johnson, a 44-year-old Sacramento resident, splitting his $1,850 rent payment seemed like a practical solution when he worked as an independently contracted delivery person for Amazon with unpredictable income. Using Flex, Johnson paid $1,350 on the first of each month and the remaining $500 on the 15th.

“It was an expense that I was incurring, but I went ahead as it was more convenient,” Johnson explained.

However, this convenience came at a price. Johnson paid a $14.99 monthly subscription fee plus 1% of his total rent ($18.50), bringing his monthly service charges to over $33. When analyzed as a loan, Johnson was effectively paying $33.49 for a two-week loan of $500 – translating to an annual percentage rate of approximately 172%.

The United States currently has roughly 109 million renters, representing about 42.5 million households. The Census Bureau estimated in 2024 that a significant portion of these households are “cost burdened,” spending 30% or more of their monthly income on housing, which limits their ability to plan for future expenses or build wealth.

Most rent payment services follow a similar model: the company pays the landlord the full rent when due, and the renter reimburses the company in multiple installments throughout the month. The services argue this arrangement provides renters with more available cash at any given time.

“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,” warned Mike Pierce, executive director of Protect Borrowers and former Consumer Financial Protection Bureau official. Pierce co-authored a recent report examining the industry’s practices.

Flex, launched in 2019, has grown to become one of the largest companies in this space. The company reports that its 1.5 million customers now process approximately $2 billion in monthly rent through its system. Several major landlords across the country now accept Flex as a payment option.

The company states that its typical customers are lower-income renters with weaker credit profiles, citing a median credit score of 604 among users. About one-third of Flex customers reportedly work multiple jobs to make ends meet. While a company spokesman noted that the average customer uses the service just three to four times annually, Johnson used it every month.

Competitors offer similar services with varying fee structures. Livble does not charge a subscription but imposes fees between $30 and $40 per transaction. These fees can equate to effective annual percentage rates between 104% and 139%, depending on how long the renter defers partial payment.

The buy now, pay later giant Affirm recently announced it is testing a program that allows customers to split rent into two payments. This pilot program operates in partnership with Esusu, a company that reports rent payments to credit bureaus to help consumers build credit history. According to an Affirm spokesman, the company is not charging renters interest or fees but may charge fees to landlords.

Credit cards represent another financing option gaining traction in the rental market. Companies like Bilt have built their business models specifically around serving renters. However, paying rent by credit card typically incurs processing fees of 2.5% to 3.5%, which landlords usually pass on to tenants. For someone paying $1,500 monthly rent, these fees amount to approximately $37.50 to $52.50 – comparable to what services like Livble and Flex charge.

Economists and tenant advocates express concern that these financing solutions fail to address the fundamental issue of rental affordability. They worry that if such payment options become widespread, landlords might begin factoring renters’ weekly cash flow into their pricing models rather than focusing on local market conditions, potentially driving rents even higher.

This concern is heightened by industry connections like Livble’s ownership by RealPage, which last year settled allegations that its algorithm enabled landlords to collude and artificially inflate rents.

As the rental market continues to tighten across much of the country, financially stretched tenants may find themselves weighing the immediate relief these services provide against their long-term costs.