Skip to Main Content

Should I get a loan for rent?

A loan for rent can help when you’re struggling to make ends meet, but it’s not always the best choice.

Author
By Emily Batdorf

Written by

Emily Batdorf

Writer

Emily Batdorf is a personal finance expert, specializing in banking, lending, credit cards, and budgeting. Her work has been featured by USA TODAY Blueprint, New York Post, MSN, and Forbes Advisor.

Edited by Jared Hughes

Written by

Jared Hughes

Editor

Jared Hughes has over eight years of experience in personal finance. He has provided insight to Fox Business, New York Post, and NewsBreak.

Updated September 27, 2024

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

Featured

Struggling to pay rent can be stressful and overwhelming, but there are resources out there that can help. Depending on your situation, a loan for rent may be a good solution.

However, using a personal loan for rent isn’t perfect, though it can ease your financial burden if you’re in a short-term bind. It can be more affordable than some alternatives, but there are still risks to weigh. 

Compare Rates Now

What to consider before taking out a loan for rent

Before you take out a loan to pay for rent, consider your financial situation. Not only does your current situation affect your ability to qualify for a loan and pay it off, but a loan can impact your finances and credit moving forward.

Keep the following in mind:

  • You’ll have to pay interest on the loan: When you take out a loan, you agree to pay it back in full, plus interest. Take time to think about whether or not you can afford to take on more debt or if it might put you into an even tougher situation.
  • You may need good credit to qualify for a loan: If your credit isn’t in great shape, qualifying for a loan can be tough. Personal loans for bad credit do exist, but they generally come with higher annual percentage rates (APRs), which account for the interest rate and any fees. If you can’t get a loan with a decent rate, it may be worth considering other options first.
  • Missing a loan payment can hurt your credit: Of all the factors that affect your credit score, your payment history has the largest impact. Falling behind on loan payments can be detrimental to your credit, so make sure you’ll be able to keep up with monthly payments before taking out a loan.

When to take out a loan for rent

Ideally, your monthly budget covers your rent, and in case of emergency, you have savings set aside to cover it. But life happens, and sometimes that’s not the case. For instance, taking out a loan to pay for rent might be the right move if:

  • You’re in between jobs: Maybe you have a new job lined up, but you won’t get your first paycheck for another month. If you’re short on rent but know you’ll soon have the income to cover it, taking out a loan for rent can be a good solution.
  • You recently moved: Moving costs can be high, and with your first month’s rent and a security deposit due upon move-in, finances may be tight. A loan can help if you need a little extra cash while waiting to receive your security deposit from your previous landlord. 
  • You have plans to save on rent: Maybe you’ve decided it’s time to move to a less expensive place or invite a roommate to live with you. If that’s the case, a loan can help you in the short term. Just make sure the money you’ll save in your new situation will be enough to cover the loan.

Compare Rates Now

When not to take out a loan for rent

Based on the considerations above, there are times when it’s not a good idea to take out a loan to pay for rent. 

For instance, if you don’t have good credit, usually defined as a FICO score of 670 or higher, a rent loan may not be the best idea. Without good credit, you may end up with a high APR and have a tougher time paying off your loan. With a high rate, you’ll either have hefty monthly payments or a long repayment period — and both will impact your budget.

Similarly, it’s probably not wise to take out a loan for rent if you don’t have a plan to pay it off quickly. Doing so may lead to falling behind on payments — which can negatively impact your credit score and make borrowing more difficult and expensive in the future.

Types of loans to consider

There are several types of loans to consider if you’re looking for a way to pay your rent. Secured loans, unsecured loans, and emergency loans are all worth consideration.

  • Secured loans: These loans require collateral — some kind of valuable asset, like a car or house — from the borrower. Because of this, borrowers can typically qualify for a secured loan more easily and more affordably compared to an unsecured loan.
  • Unsecured loans: Unlike secured, unsecured loans don’t require collateral from the borrower. This makes them riskier for the lender, who will often charge a higher interest rate to compensate. You may also have a harder time qualifying for an unsecured loan, especially if your credit isn’t in great shape. 
  • Emergency loans: This type of loan refers to short-term loans that provide fast funding in the case of an emergency. They can be secured or unsecured and include products such as personal loans, credit card advances, and payday loans.

Tip: When considering a loan for rent, do not take out a payday loan. APRs on these loans are often as high as 400%. While they may be easy to get, the cost is astronomical compared to other types of loans.

Advertiser Disclosure

All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | SoFi Disclosures | Read more about Rates and Terms

Pros and cons

Before taking out a loan to pay for rent, be sure to weigh the pros and cons. 

Pros: 

  • Avoids missing a rent payment: Taking out a loan to pay rent can help you avoid the negative consequences of missing a rent payment, such as damage to your credit score over time and possible eviction if you miss more payments.
  • Quick funding: Some lenders can approve your application and disburse your funds within a day or two. Some could take longer, depending on the lender. 
  • Costs less than other alternatives: A rent loan may cost less than some alternatives, such as a payday loan or a credit card.

Cons:

  • May increase your debt: Taking out a loan increases your debt burden, possibly leaving you in a worse position than before.
  • Only a short-term fix: Paying rent with a loan is only a short-term solution. If the issue persists, you may want to consider other alternatives, such as talking to your landlord, or asking a relative for help.
  • High interest rates: If you don’t have good credit, you may face high interest rates, which can dramatically increase how much you pay for a loan.
  • Includes fees: Loans have a variety of fees that can add to the cost of borrowing, such as origination fees.

How to apply for a personal loan for rent

If you decide you want to apply for a personal loan for rent, you can do so with the following steps: 

  • Compare loans: Shop around for a loan by comparing different lenders’ APRs, terms, fees, and funding times. It’s also smart to check out customer reviews and make sure you’re considering reputable lenders. 
  • Apply for a loan: After choosing a loan that has terms and an APR you’re happy with, apply for the loan online or in person. You’ll have to provide documentation of your income and address, and lenders will consider your credit history, debt-to-income ratio (DTI), and overall financial situation before approving you. 
  • Receive funding: If the lender approves you for a loan, you’ll agree to the terms and wait for funding. Depending on the lender, this can take as little as a day. 

Keep Reading: How to Apply for a Personal Loan

Compare Rates Now

Alternatives

If a rent loan won’t work for you, there are plenty of alternatives that may be better for your situation. Keep the following options in mind when looking for help with rent:

  • Ask your landlord for flexibility: If you’re between jobs or waiting on a security deposit from a previous rental, your landlord may be understanding. Try explaining your situation, and ask if they’re willing to be flexible for a month or two.
  • Reduce your rent payment: If your rent payment is just too high, consider finding a way to reduce it. You could live with a roommate and split the cost of your current rental, or you could move to a less expensive unit.
  • Increase your income: If you’re not interested in reducing your rent, think of ways to boost your income. For example, you may be able to negotiate a raise at work or take on a side hustle to give your budget more wiggle room.
  • Ask for help: If you’re struggling to find a solution, consider asking friends or family for financial help in the short term. Offer to put the agreement in writing. You can also call 211 to speak with someone who can connect you with community resources that can help.

FAQ

Are there any government programs that offer loans for rent?

Open

What happens if I default on a loan for rent?

Open

Are there any tax implications associated with a loan for rent?

Open

Loan Amounts:

Meet the expert:
Emily Batdorf

Emily Batdorf is a personal finance expert, specializing in banking, lending, credit cards, and budgeting. Her work has been featured by USA TODAY Blueprint, New York Post, MSN, and Forbes Advisor.