It can be stressful to realize you won’t have enough money for rent. You may wonder whether you should take out a personal loan to cover it. It depends on your financial situation, but it’s a good idea to look at other options first. Taking out a personal loan for rent should be a last resort.
If you’re struggling to make your rent payment, a personal loan from a bank, credit union, or online lender might come in handy. But keep in mind that you will have to pay interest and any other fees the lender may charge. Plus, you’ll likely need good to excellent credit to get approved and lock in a lower rate.
Before you take out a loan for rent, consider your circumstances. Figure out whether you can afford more debt. If you’re not in a position to repay the loan, you’ll want to look for alternative ways to pay your rent.
There are a few different types of loans you can choose from to help make your rent payment, including:
| Good to know: Be wary of risky options such as payday loans. These loans are short-term, small-dollar loans you’ll need to repay within a few weeks, usually when you get your next paycheck. Since they’re notorious for sky-high interest rates — a typical APR is close to 400%, according to the Consumer Financial Protection Bureau — and difficult repayment terms, you should avoid them at all costs. |
The benefits and drawbacks of paying for rent with a personal loan include:
To apply for a personal loan for rent, follow these steps.
- Compare lenders: Explore personal loans from as many lenders as possible. Compare factors like interest rates, terms, and fees to zero in on the best option for your budget and needs.
- Choose a loan: Pick the loan with the lowest interest rate and, ideally, the shortest term. Just make sure you feel confident you’ll be able to pay it back on time.
- Complete the application: Most lenders will allow you to apply for a personal loan online. You’ll need to provide information like your Social Security number and gross income. Additionally, lenders will perform a hard credit pull, which will affect your credit score.
- Get your funds: Upon approval, the lender will distribute your funds. Direct deposit is usually the fastest method.
Learn More: Where can I get a personal loan?
In general, it’s not a good idea to pay for rent with a loan. But if you’re in need of a quick solution and feel confident you can repay your loan quickly, it may be an option. For example, if you’re between jobs, a loan can cover a few months of rent until you get a paycheck again.
If you know you won’t be able to repay a loan for rent, it’s in your best interest to explore other options, especially if you can’t land a low interest rate and favorable terms.
If you decide that paying for rent with a loan isn’t a good option, here are some alternatives to consider.
You’ll likely need good to excellent credit to get approved for a loan for rent, which is typically a FICO score of 670 and up. But some lenders are more flexible and might be willing to extend you an offer, even if you have bad credit or fair credit.
Yes, you can use a loan to pay for rent payments you owe. But because a loan usually comes with interest charges and fees, it’s a good idea to explore other options first.
Most lenders offer fast funding, so you can receive a loan for rent pretty quickly. Depending on the lender, this may be the same day you get approved, the next business day, or within a few business days.
There are government programs that can help you pay for rent. The Department of Housing and Urban Development has a Rent Relief Resources page that’s a good place to search for them.
If you default on a loan for rent, your credit score will take a hit. Also, if your loan was secured to collateral — like your house, for example — you may lose it.
Check Out: How to pay off credit card debt