WASHINGTON — Loans that allow renters to split monthly rent into smaller payments can add fees, increase financial pressure and expose tenants to eviction risks if payments fail, the National Consumer Law Center warned in a new issue brief.
The consumer advocacy organization urged states to strengthen oversight of the products, often marketed as “rent now, pay later,” while requiring landlords to offer more flexible payment options at no additional cost.
The products are promoted as a way to address cash flow problems by allowing tenants to spread rent payments across the month. But the center said fees and repayment obligations can compound financial problems for households already struggling with housing costs.
“The bottom line is that rent-splitting loans come at a cost—people who turn to these products pay a premium to get all of their rent paid at one time,” said Ariel Nelson, a senior attorney at the center. “Many rent-splitting companies charge steep fees.”
Fees And Payment Risks
The center identified Flex, Esusu, Split Pay, Qira and Livble among companies offering rent-splitting products. Depending on the provider, charges can include membership or subscription fees, late fees, processing fees, split fees and origination fees, the organization said.
Some companies advertise 0% interest while charging substantial fees, according to the center. It also said some providers obscure cost information or structure products to appear inexpensive.
Providing direct access to a bank account can create additional exposure to overdraft or insufficient funds fees, the center said.
“Like payday loans and other short-term loans, rent-splitting loans can lead to cycles of debt, reborrowing, and multiplying fees that are hard to escape,” said Lauren Saunders, a senior attorney at the center.
Technical problems and customer service failures can also leave tenants facing eviction threats when a provider fails to pay rent, the organization said. Bundled subscriptions can increase costs, while arbitration clauses and class-action waivers can limit customers’ ability to pursue relief, it added.
Changes Sought For Landlord Payments
The issue brief, “What States Can Do to Protect Tenants from Rent-Splitting Loans,” calls on states to cap and regulate landlord-imposed late fees and other rental charges.
The center also urged states to require landlords to:
- Accept rent in two installments without charging tenants extra.
- Change rent due dates at no cost upon request.
- Accept payments from multiple sources toward a single month’s rent.
- Offer at least one free, accessible payment method and cap convenience or payment-processing fees.
Stronger Lending Rules
The center recommended banning subscription fees for rent-splitting loans and treating the products as closed-end credit, with all fees included when calculating compliance with an annual percentage rate cap.
That cap should be 36% or less and calculated for each extension of credit, the organization said.
It also urged states to enforce small-loan laws, including rate caps and licensing requirements, through enforcement actions, guidance and legislation closing loopholes. The center recommended limiting late fees on rent-splitting loans to a total of $8 per month.
