MW Tempted to use buy-now-pay-later to split your rent payments? Watch out for these fees.

By Genna Contino

Want to pay rent in two installments instead of one? The fine print can make '0% interest' costlier than it sounds.

A growing number of companies are offering buy-now-pay-later products to split up rent payments into installments throughout the month.

The first of the month is a signal to millions of tenants that rent is due in full. While some landlords offer a short grace period for renters to scrounge together enough cash, fintech companies are offering a different deal: split your rent into installments throughout the month.

This isn't new: Nearly a quarter of buy-now-pay-later users say they have used pay-in-four loans - the type that shoppers can use to buy furniture, clothes or even groceries - to pay for rent or housing expenses at least once, data from a survey by Protect Borrowers, Groundwork Collaborative and Data for Progress show.

But now, a growing number of companies are offering financial products to split up rent payments specifically.

Last month, Affirm (AFRM), which offers both interest-free pay-in-four plans and monthly installments, announced a pilot partnership with fintech company Esusu that allows tenants to split their rent into two payments. Other fintechs like Flex and Livble also have installment plans for people to pay rent over the course of a month.

For many Americans struggling to afford the costs of housing and basic necessities right now, financial products that can help stretch their paychecks may be appealing. Rents shot up fast during the pandemic, and though those increases have started to slow down, about half of all renters are considered cost-burdened, according to Harvard University's Joint Center for Housing Studies - meaning they spend more than 30% of their income on housing.

But consumer advocates urge renters to be wary of buy-now-pay-later products for rent. While these products may not charge traditional interest, many still charge monthly subscription fees that can add up significantly over time.

Read more: Here are the ideas that could really help solve America's affordability crisis in 2026

"When it becomes the new normal to pay for rent with a subscription fee, then all that's happened is the cost of living has gotten that much higher," said Adam Rust, the Consumer Federation of America's director of financial services. "Our economy is in late-stage precarity brought to you by 'The Rent Is Too Damn High Inc.,' with financing by nonbank apps."

They might be classified as no-interest - but they're not free

So how can it be so costly to use a rent-now-pay-later product if they advertise 0% interest?

Imagine a tenant splits a $2,000 rent payment into two installments, and effectively receives $1,000 upfront in exchange for a $30 membership fee for the month. That amounts to roughly 3% of the amount advanced for about two weeks. When annualized - the standard way lenders calculate borrowing costs - that equates to an interest rate near 80%. If the amount advanced is smaller, or the repayment window shorter, the effective rate can climb well above 100%, which advocates say illustrates how quickly fees can stack up.

Read more: These apps offer quick cash, but some users say they're trapped in debt. This loophole is their escape hatch.

In certain scenarios, the effective annual rate can exceed 180%, according to estimates from Protect Borrowers and Towards Justice, nonprofits that advocate for people in debt.

The nonprofits also warn that because rent is a recurring, nondiscretionary expense, borrowers who rely on these products once may need to use them again the following month if their underlying income gap hasn't changed. Over time, recurring subscription fees and short-term charges can pile up on top of already high housing costs, increasing the total amount that renters pay just to stay current.

"People still don't have enough money to pay the rent, but they have the opportunity to stay in debt perpetually," said Mike Pierce, the executive director of Protect Borrowers, which focuses on fighting predatory lending practices. "You end up paying fees month over month."

Rent-now-pay-later companies dispute advocates' calculations and argue that monthly membership fees are not legally considered interest under current lending laws.

Read more: Americans just spent a record $20 billion with buy-now-pay-later. Here's what to do if you overdid it.

"It's a regulated credit product, so there's no debate about whether this is a loan," said Ryan Metcalf, vice president of public affairs at Flex. He said the company disagrees with advocates' use of an "effective APR" calculation, arguing that monthly membership fees are not legally defined as interest. "That's not what the law is."

Flex's data do not support claims that renters who use its pay-in-two rental product are trapped in ongoing borrowing, Metcalf said. The average Flex customer uses the service for 3.7 months a year, and the median amount is three rent payments.

"If a perpetual rollover cycle were occurring, we would expect continuous monthly utilization and deteriorating borrower outcomes," Metcalf said. "Our data show the opposite."

Affirm's rent pilot doesn't allow users to continue borrowing if they still have an outstanding balance from the prior month, the company said.

From the archives (Sept. 2025): Klarna goes public as more people say buy-now-pay-later is the only way they can afford to buy things

"This pilot will give eligible renters a flexible option to apply to pay rent in two equal payments over two weeks at 0% APR," an Affirm spokesperson told MarketWatch. "Affirm underwrites every application and we only approve people for what we believe they can responsibly afford to repay as Affirm never charges any late or hidden fees. We're approaching this use case thoughtfully."

Livble did not respond to MarketWatch's request for comment.

Here's what different rent-now-pay-later platforms have to offer

Not every rent-now-pay-later app is created equally. Here's what we know about a few of the most popular platforms in the market right now.

Flex

Flex presents the option to split rent payments in two for a monthly membership fee of $14.99 plus a bill-payment fee totaling 1% of the rent amount. Flex likened the bill-payment fee to ACH or card-processing fees ranging from 1% to 3.5% that typically come with traditional rent payment portals. "Presenting a disclosed processing fee as interest does not reflect its functional purpose," said a Flex spokesperson, in response to consumer advocates who say the fees amount to interest.

Affirm

Affirm recently rolled out its rent-now-pay-later pilot, which requires users to be members of Esusu Plus or Premium, and is priced at $35 or $50 per month. Affirm said its product itself carries 0% APR and no late or hidden fees.

Livble

Livble allows users to split rent payments by up to four installments. "Finance charge ranging from $30 to $40 applies, and the amount is dependent on the date that rent is submitted for the month it is due," the company's website says in the fine print. Livble did not respond to MarketWatch's request for comment.

Credit-building perk

Some of the services offer a rent-reporting feature, which can help some renters establish or improve their credit by reporting their on-time rent payments to the three major credit-reporting agencies.

For example, Esusu sends its members' monthly payments to all three credit bureaus and can report up to two years of past on-time payments to help build credit quickly. Flex has the option to automatically report payments to TransUnion (TRU) to help build users' on-time payment history - and the company says it won't report any missed or late payments to credit bureaus.

Taking out a loan? First make these 5 smart moves to raise your credit score - whether you have weeks or months

The impact of rent reporting appears most beneficial for renters at the lower end of the credit spectrum, said Daniel Teles, a principal research associate at the Urban Institute, while the benefits are less clear for those who already have moderate or higher credit scores.

"If you have a credit score below 550 or so, [or] below 500, or if you have no credit at all, there's some clear benefits to having rent reporting, as long as you're actually paying your rent on time," Teles said.

As for whether paying a monthly fee for rent reporting is worth it, Teles says it depends on the individual. A modest boost to one's credit score could lower borrowing costs on products like auto loans or credit cards, potentially saving them more than the subscription cost. But the long-term payoff - particularly for something like qualifying for a mortgage - is less certain, and renters would need to weigh the fee against potential interest savings in their specific situation.

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-Genna Contino

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February 13, 2026 16:18 ET (21:18 GMT)

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