Paying rent with a personal loan: what you need to know

0

If you’ve fallen behind on your rent, a personal loan can help you catch up. Find out how to find the best rates and repayment terms for your personal loan. (iStock)

Millions of Americans have lost their jobs during the pandemic and a recent survey found that many of them are now struggling to pay their rent. The survey found that more than 30% of households have exhausted most or all of their savings, and 19% are struggling to pay their rent.

Depending on where you live, the consequences of not paying your rent can be serious. This is why some borrowers consider taking out a personal loan to pay their rent. If you’re considering a personal loan to supplement your rent, consider visiting Credible to compare rates, lenders, and options based on your personal circumstances.

Can I take out a personal loan to pay my rent?

If you don’t know where your next rent payment will come from, covering the cost with a personal loan is an option. A personal loan is a flexible, unsecured loan that can be used for a variety of purposes, including rent. Taking out a loan to rent is similar to applying for any other loan.

Personal loans come with fixed interest rates and pre-approval is relatively easy. You can apply for a personal loan from a financial institution like a bank or an online lender.

The amount you borrow will depend on the extent of your financial needs. Add up the amount you owe in back rent and the number of months of rent you expect to have to cover. You can use Credible’s personal loan calculator to determine how much you can borrow.

What are the advantages and disadvantages of taking out a personal loan?

Benefits

No collateral required: If you qualify for an unsecured loan, you do not have to post collateral. This means that you don’t have to use your personal property or your car to secure the loan.

Fast approval process: If you are looking to take out a personal loan to rent, the process should be the same as for any other personal loan. Prequalification is quick and easy, and since your lender is only performing an indirect credit check, your credit won’t suffer. Once you’re ready to finalize the application process, your lender will perform a credit check on your credit report.

Quick Funding: Thanks to the growing number of online lenders, loan approval is often quick and easy. Same-day loan funding is a possibility, but at the very least, you should receive the funds within a day or two.

Low rates: Personal loans tend to come with low rates, especially compared to credit cards. And because personal loans come with fixed rates, your monthly payments will always stay the same.

Multiple uses of funds: In addition to paying your rent, you can use a personal loan to pay off credit card debt or finance a major purchase.

The inconvenients

Good credit is necessary: You will need a good credit profile to get the best loan rates. If you’re struggling with bad credit, you may find it difficult to get approved. And loans for bad credit often come with very high rates. Many factors affect your credit and working with a financial advisor can help improve your score.

Possible costs: Some lenders charge high fees for personal loans, and these can add up. For example, you may have to pay an origination fee, ranging from 1% to 8% of the total loan amount. And some lenders will charge a prepayment fee if you pay off your loan early.

How to find the personal loan adapted to my situation?

If you want to take out a personal loan to improve your financial situation, the best thing to do is to consider your options. Receiving quotes from a variety of lenders will help you find the lowest rates and most favorable terms.

The easiest way to do this is to use a lending marketplace like Credible. With Credible, you can get pre-approved for a personal loan and receive offers from multiple lenders.

To begin, you will indicate the amount you wish to borrow and the purpose of the loan. Once you have chosen a lending company, you complete your application and complete the loan.

What are my other options?

If you’re not sure whether taking out a personal loan is the right choice for you, there are other options you can consider. If you’re having trouble paying your rent, the first thing to do is talk to your landlord.

If you are used to being a good tenant and paying your rent on time, they may be willing to work with you. You can also ask your friends or family for financial help.

Many Americans are struggling financially right now and worried about how they will be able to pay their rent. If you need a short-term cash injection to cover rent payments, a personal loan is still your best option, thanks to low rates and flexible repayment terms.

You can explore your options by checking out Credible to compare rates and lenders today.

You have a financial question, but you don’t know who to contact? Email the Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Share.

Comments are closed.