NEW YORK — As housing affordability pressures continue to strain household budgets, a growing number of financial technology companies are offering “rent now, pay later” products that allow tenants to divide monthly rent payments into smaller installments, a new report.
Rising housing costs and mismatches between rent due dates and paycheck schedules are fueling demand for the products, which function similarly to buy now, pay later loans, according to the Financial Times.
Under the model, lenders pay a tenant’s rent directly to a landlord and then collect repayment from the renter through a series of installments. Companies offering the products told the Financial Times that their customer bases are expanding rapidly.
Among the latest entrants is a partnership announced earlier this year between Affirm and Esusu that offers rent-splitting loans to consumers.
Appeal to Gig Workers
Wemimo Abbey, co-founder of Esusu, told the Financial Times that the service is increasingly appealing to workers with freelance, contract or gig-economy jobs whose income schedules do not always align with monthly rent due dates.
“People can make [rent payments], it’s just the timing,” Abbey told the newspaper.
Abbey said persistent inflation and stagnant income growth are creating conditions that could significantly expand the market for rent-splitting products.
Another provider, Flex, told the Financial Times it has processed $37 billion in rent payments since its launch in 2019.
Ongoing Challenges
The growth comes amid ongoing affordability challenges in the U.S. housing market. The Financial Times cited research from the Harvard Joint Center for Housing Studies showing that 83% of renters earning less than $30,000 annually spent more than 30% of their income on rent and utilities in 2024. Households that spend more than 30% of income on housing are generally considered cost-burdened by federal housing standards.
Industry observers say the products are designed to address cash-flow challenges rather than a lack of income.
According to the Financial Times, rent-splitting services have emerged as buy now, pay later products expand beyond retail purchases into everyday expenses such as groceries, utilities and housing. Supporters argue that installment-based repayment offers consumers greater predictability than alternatives such as overdraft fees, late-payment penalties or revolving credit card debt.
