How to Pay Rent With a Personal Loan

If your rent's due and you don't have it, don't be scared. Try getting out of a jam with a personal loan.
Written by Gina Pogol
Financial Expert
Managing Editor
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It can happen to anyone. You had to repair your car, or someone stole your wallet, or you didn’t get as many hours as you needed at work – and now your rent is due and you don’t have it. Even if you can convince your landlord to let you pay a couple of weeks late, what will you do next month? A personal loan to pay rent can buy you some breathing room.

What Happens If You Don’t Pay Rent?

If you can’t pay your rent, the consequences may be severe, depending on where you live. At the very least, you’ll incur a late fee (generally 5% of the rent due) and possibly an additional fee if you are extra late (up to 10% of the rent due).

Your rental history may become part of your credit report if your landlord uses a service to report payments. Or, if you apply to buy or rent a home in the future, late rent can cause your application to be denied.

You could be evicted if you don’t pay your rent. In some parts of the country, a landlord can boot you out with three days’ notice. And if you leave while owing past-due rent, the landlord may sue you and obtain a judgment. Judgments are public records and can do a lot of damage to your credit score.

So don’t let these consequences pile up. Act early and avoid expensive and stressful problems.

Which Lenders Have the Best Personal Loan Rates?

Finding the lender with the best personal loan to meet your needs is as simple as using our search tool. Compare personal loans and find the best rates being offered today.

Dos and Don’ts If You’re Short on Rent

If you know you won’t be able to pay your rent in full and on time, face the problem head on.

  • DO inform your landlord in writing if you need a few extra days to come up with your rent.
  • DON’T say nothing and hope your landlord won’t notice the missing payment.
  • DO explain the nature of your problem, and when you expect to solve it.
  • DON’T go empty-handed. A partial payment is better than no payment at all.
  • DO promise in writing to pay the full amount by a certain date – and keep that promise.
  • DON’T offer nothing but weak excuses.
  • DO apologize for the late payment and promise to pay on time in the future.
  • DON’T write a check that you can’t cover. The fees and aggravation will be much higher.

Your landlord will probably charge a late fee. Don’t fight over it. However, if your relationship with the landlord is good and you have never been late before, you could ask for a fee waiver. Especially if you pay at least part of the rent on time.

Related: How to Prepare for a Recession

Pay Rent With a Personal Loan

The steps listed above can be tough to complete. How can you promise never to miss a rent payment again? When after paying his month’s rent (late) you’ll have to come up with next month’s rent right away? How will you get out of that cycle of being broke on the first of the month? By getting some money that you don’t have to repay in full the very next month.

A personal loan to pay rent can give you 12 months or longer to catch up on your rent payment. If you missed a $1,000 rent payment, you don’t have to come up with $2,000 the following month. Instead, you could slowly pay that $1,000 over time.

If you pay rent with a personal loan, you could improve your credit score. An installment loan with a good repayment history looks good on your credit history. Even better, once you pay your loan off, keep sending that same monthly amount each month – to your own savings. So that the next time you have a financial emergency, you’ll have money to cover it.

How Does a Personal Loan for Rent Work?

You can find personal loans in amounts from $1,000 to $100,000. Their interest rates range between 6% and 36% for most mainstream lenders. While loan terms can be up to ten years, you should be able to cover a rent loan in 12 months or fewer. The chart below shows how the loan amount and interest rate affect the payment over a one-year term.

Payment by Loan Amount and Interest Rate

Interest Rates $500 $1000 $1500 $2000 $2500 $3000
6% $43 $86 $129 $172 $215 $258
9% $44 $87 $131 $175 $219 $262
12% $44 $89 $133 $178 $222 $267
15% $45 $90 $135 $181 $226 $271
18% $46 $92 $138 $183 $229 $275
21% $47 $93 $140 $186 $233 $279
24% $47 $95 $142 $189 $236 $284

You can find personal loan offers on this site. Choose the offer that best meets your needs. Here is how personal loans work:

  • They are unsecured, so you don’t put up an asset like a car or home.
  • Because they are unsecured, your interest rate depends a great deal on your credit rating.
  • Personal loans usually come with fixed interest rates, which makes budgeting easier.
  • You can borrow for any legal purpose.
  • It takes a few hours to a few days to get your money.

Other Uses for Your Personal Loan

Of course, you don’t want to borrow more than you need or can repay as agreed. But if you take out a personal loan for rent, you might be able to solve another problem by borrowing a little extra.

If your credit card debt is too high, for example, you could clear it with a personal loan. Personal loan interest rates are generally lower than credit card interest rates. And replacing credit card debt with an installment loan can improve your credit score. Another advantage is that with a personal loan, there is an end in sight for your credit card debt. While making the minimum payment on your plastic practically guarantees that you’ll be in debt forever.

Another good use for a personal loan is to create an emergency fund. So if anything unexpected comes up, you’ll be able to cover it and still pay your rent on time. If your rent is $1,000, you might borrow $2,000 and put the extra into an emergency savings account. It’s there if you need it. Pay the loan off in a year. And if you have had no emergencies, you’ll have $1,000 in savings.

Once you repay the personal loan, continue to set aside the payment amount. But this time, add it to your savings account. And if you go another year without emergencies, you’ll have over $3,000 in savings.

Instead of being trapped in a cycle of paying late and being broke, you’ll be on your way to financial security. And to having a good credit score. And making your landlord happy, or perhaps even buying your own home.

Compare personal loan offers now

About Author
Gina Pogol
Gina Freeman writes about personal finance and has been featured on MoneyRates, The Mortgage Reports, MSNMoney, Fox Business, Forbes, The Motley Fool, and other fine websites. Her background includes tax accounting with Deloitte, over 20 years in mortgage sales and underwriting, systems consulting for Experian, and several years in bankruptcy law. Gina enjoys helping consumers make confident and intelligent financial decisions.
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