Personal Loans To Pay Rent

Should I take a personal loan to pay rent?

While you can use a personal loan to pay rent, you should make sure that this will not worsen your financial situation. Sometimes it can become difficult to pay your rent. Rent is often one of the most expensive monthly expenditures that you have to pay. Couple rent with student loans, utilities, medical insurance premiums, groceries, and other monthly expenses, and it is easy to see how people can fall behind on their rent payments. However, rent is also probably the most critical bill that you pay each month because it provides you with a place to live and shelters you from the outside elements. It is also a place that is your home, where you can feel comfortable, and where you can relax. Before falling behind on rent, you should consider cutting back on other expenses, or if you have to choose which bills are going to get paid and which ones are not at a particular moment, you should choose other bills before you choose to rent. Other bills can hurt your credit score, however, they cannot evict you and leave you scrambling for a place to live.
Regardless, if you are living paycheck to paycheck, the situation may arise where you are unable to pay your rent. Yes, it is completely possible to take a personal loan to pay your rent, but should you? Using a personal loan to pay rent, unless you know you can pay the loan within an extremely short period of time, can be quite costly. Using a personal loan to pay rent should be one of your last options. If you take a personal loan to pay rent, there is going to come the day that not only will you have to make your monthly rent payment, you now will have an additional monthly loan payment to balance along with all the same monthly bills you had previously. You may end up making your situation worse in the long run if you use a personal loan to pay your rent.
Also, if you start to miss your monthly loan payments to make sure all your other bills are paid, then you can begin to damage your credit score to the point where you may not be able to secure new credit in the future.
That being said, there may be one scenario where taking a personal loan to pay rent may actually save you money in the end. For example, let us say that you can negotiate a rent reduction with your landlord if you pay something like 6-months of rent in advance. Let's say you negotiate a 25% rent reduction for 6-months of rent in advance and you qualify for a personal loan to cover those 6-months of rent at an interest rate of 12%. If you make your monthly payments on time, not only will you pay less over the life of the loan, but you could build your credit at the same time. But since this scenario, not impossible, but definitely rare, is not the norm, you should generally avoid using a loan to pay rent unless you have exhausted all other options.

Why do some people take loans for rent assistance?

People can take loans for rent assistance for many reasons. If you are someone who lives paycheck to paycheck, you lose your job or you are between jobs, or you move from one apartment to another, you may have a number of different scenarios that arise that can cause you to be short on your rent. If you live paycheck to paycheck, you know that it's a struggle each month to balance all of your expenses and to try to save a little money to build up a rainy day fund. It is estimated that nearly 70% of Americans have less than $1,000 in savings. All it takes is one emergency room visit, dental bill, or car repair to drain whatever savings you have left and possibly put you in a position where you do not have enough money to cover the rent. This is what personal loans can be helpful for. A personal loan, when obtained responsibly, can help to either cover your unexpected expenses or your rent so that you can make ends meet and live to fight another day.
Another alarming statistic to consider is that more than half, about 51% of Americans have less than three months' worth of emergency savings to cover expenses if they should lose their job. If someone loses their job and they need to find a new source of income, then they may consider taking out a personal loan to cover their bills for a few months while they are job searching.
The two previous examples are illustrations of scenarios that can arise where someone may not have any other options. Again, you may want to explore other options like seeking help from a friend or family member and/or applying for some government grants or temporary rental assistance programs before you apply for a personal loan to cover your rent payments.
That being said, there are a few instances where using a personal loan may actually make some sense to cover your rent payments for a short period of time. For example, if you are between jobs and you have a gap in your pay periods. Possibly you are switching from an hourly job that pays weekly to a salary job that pays monthly and the time between your last paycheck and your new paycheck is going to be a month or longer. As long as you pay back the loan in full as soon as you get your first paycheck from the new job, then it may not cost you very much or hardly anything at all to take a loan to cover your expenses for a short period of time.
Another scenario where taking a personal loan to pay rent may not be a bad idea is if you are moving apartments. If you are moving into a new apartment you may be required to pay first and last month's rent and/or a damage deposit. You may not have the money to pay the damage deposit at the time of signing the lease, however, if you take a personal loan to cover the time it takes for your previous landlord to refund your security deposit from your old apartment, then you may not have to pay too much extra if you use the old security deposit to immediately pay off the short term personal loan you took out.
However, if you have a gap between your paychecks, a gap between paying a new apartment's damage deposit before receiving your old deposit, or if you live paycheck to paycheck and you end up losing your job, you may want to consider other options to pay your rent before ultimately deciding to take a personal loan out.

Why would you use a personal loan for rent?

There are a number of reasons why you would use a personal loan for rent. If you are unable to pay your rent and your friends or family members are unable to float you a small loan to cover rent for a month or two, then you may consider taking out a personal loan as an option to help you get by for a short period of time. Or, maybe qualifying for government rental assistance is difficult where you live or for your specific situation, then again, a personal loan could be useful. Other scenarios may include changing jobs, changing apartments, or if you are self-employed or a seasonal employee, you may use a personal loan to cover rent and other expenses while you wait for your small business to start bringing in revenue or until your busy season picks up again. An example of a seasonal employee that may need a personal loan to cover rent for a short period of time is possibly a carpenter who does not work very much, if at all, during the winter months but, then they are flush with work once the ice starts to thaw in the spring. A personal loan could be used to cover their expenses while they are laid off and then use their first couple of paychecks to pay the loan off in full.

When is it a good idea to get a rent loan?

It may be a good idea to take a rent loan if you know that your situation is only temporary and that you will be able to pay off the entire loan in a short amount of time. This may occur when you change jobs and you have a large gap between paychecks or when you change apartments and you need some help covering the damage deposit for the new apartment while you wait for your previous landlord to cut you a check for your old security deposit. Also, a rent loan could be a good idea if you have exhausted all other options and you need the loan to make sure you are not evicted. Generally, evictions can stay on your record/rental history for up to 7-years. This may make it extremely difficult to get an apartment in the future.

When is it a bad idea to get a rent loan?

Getting a rent loan is a bad idea if you know you may not be able to pay off your loan for quite some time. Using a personal loan to pay rent can become very expensive quickly. Additionally, maybe you do get a personal loan to cover 3-months of rent, what happens when the 3-months are up and now you have a loan payment in addition to your normal rent payment. You may be putting yourself into a worse situation than before you started. This is why it is recommended that you explore all other options before taking a personal loan to pay for rent. Even if you know that you will be able to pay off the loan right away, it may be better to take a loan from a friend or family member so you do not need to have the hard inquiry and additional debt even touch your credit report.

Types of loans to pay rent

If you are looking for a loan to pay rent, you can always apply for an unsecured or secured personal loan, you can take a cash advance on your credit card or open a personal line of credit, or you can use a payday loan center, title loan center, or pawnshop. The types of loans listed above are listed in order of best to worst options. You should explore your personal loan options before taking a cash advance from your credit card or using a payday loan center, for example.
In summary you can use the following loans to pay rent:
Personal loan
Cash advance
Personal line of credit
Payday loan
Car title loan

Alternatives to rent loans

Before you take out a personal loan to pay for rent, you may want to consider all of your options first. Using a personal loan to pay rent can become expensive quickly and it can add to the amount of money you need to spend on bills each month by adding a monthly loan payment to your existing rent and bill payments. A personal loan may not be a bad idea if you plan on paying off the loan within a short period of time, but if not, then you may want to consider one of the following options.
Find additional income: You may need to get a part-time job, sell some personal property, create a side-gig selling crafts on Etsy, or get creative with ways that you could supplement your income each month. Selling personal property may be a short-term solution to get you by until you start that second job or side-hustle.
Talk to your landlord: If you have a good relationship with your landlord and you have a solid history of paying your rent on time, you may want to talk to your landlord and explain your current situation. They are not required to, but they may be willing to work with you to find a temporary solution while you find the long-term solution.
Find a roommate or sublet: If you have the additional space to rent out a spare bedroom or basement, you may consider taking in a roommate to help pay for rent and utilities. If not, you could talk to your landlord about subletting your apartment for a few months while you move in with a family member or friend to take some time to get back on your feet.
Talk to friends or family: It is not always comfortable to ask your friends or family for a short-term loan, however, they can be more understanding of your situation and be willing to help you out of a bind. Just be sure you pay them back as soon as possible to avoid causing any damage to your personal relationship. It is one thing not to pay a lender, but to not pay back a friend or family member can hurt everyone involved.
Government/non-profit/religious organizations: Start making some phone calls, get online, see what kind of programs may be available in your area to provide some short-term relief to prevent evictions, and help with some rental assistance.