Over the last few years, more Americans have chosen a more expensive option called “Buy Now Pay Later.” Most financial experts advised consumers to avoid it because of the higher interest rates it carries.
But now, this concept is increasing in the rental community. It’s called Rent Now Pay Later (RNPL).
Here’s how it works
Companies such as Livble, Flex, and Affirm assist renters who need financial help with their monthly rent by splitting up the payments. Flex will pay the landlord in full, and the renter pays installments to the middleman, such as Flex.
If your monthly rent is $2,000, Flex will pay the landlord $1,500 at the beginning of the month, then the remaining $500 in the middle of the month.
RNPL advocates cheer the program as a way to help those when times are slow, but financial experts say it comes with a higher cost; the RNPLY should be avoided.
“If you read the fine print, these companies are giving you a line of credit, which means you will pay more in fees, and if you are late on your payments, the interest rate is through the roof,” said Florida Daily financial analyst Steve Beaman.
Some companies will charge a monthly service fee ranging from $ 14.99 to more than $33, with interest rates over 31%.
The company Flex says it has over 1.5 million customers who spend around $2 billion a month using its services.
Financial Analyst Steve Beaman says there is a need for alternative financing when tough times hit, but warns the RNPL plans could cause people to go deeper into a financial hole, especially if you’re still paying off last month’s rent and next month is expected asap.
