Falling behind on rent is stressful, especially when you’re worried about being evicted. If your paycheck isn’t stretching far enough or you’ve had an expensive bill pop up, it could feel like there’s no way to catch up. That’s where rent loans could help.
Taking out a loan might be one way to avoid eviction, but it’s important to understand how a rent loan works and when it makes sense.
How does a rent loan work?
A rent loan is a type of personal loan that allows you to borrow a lump sum of money to cover rent and other bills. The borrower must then typically pay back the loan over a set period of time using fixed monthly payments. The payments will cover the principal (the amount of money that was borrowed) and interest (the cost of borrowing).
Rent loans can be helpful if you need to pay rent right away and don’t have another option.
How a rent loan helps prevent eviction
Eviction can happen quickly depending on where you live. If you’ve received a notice from your landlord or are worried about getting one soon, a loan could give you the money you need to catch up on rent owed and stay current.
A rent loan may also be a potential answer if you’re dealing with a temporary setback like an unexpected expense or job loss, but you expect to have a steady stream of income soon.
If you qualify for a rent loan, you could stay in your home, avoid the stress of moving and give yourself more time to consider your options while you make a long-term plan.
Know how much you need to borrow
Before applying for a rent loan, figure out exactly how much you need. Look at your rent amount, consider the amount of any possible late fees and think about whether you owe money for utilities or other bills. It might be tempting to borrow more than you need, but remember it’s your responsibility to pay back the loan with interest.
Borrowing only what’s necessary could help keep your loan payments manageable and make the loan easier to repay.
Think about your repayment plan
The faster you pay off the loan, the less interest you’ll end up owing to the lender. But don’t stretch yourself too thin. You still need to be able to cover groceries, utilities and other bills. Look for a loan with a repayment plan that’s realistic for your income.
If you’re expecting a tax refund, bonus or new job soon, you might be able to pay off the loan early. Be aware of any additional lender fees so they’re not a surprise. Prepayment penalties, a fee some lenders charge if you pay off a loan ahead of schedule, are an example of this.
You’ll feel better about the loan amount if you are sure it’s something you can repay comfortably.
Other ways to get help besides rent loans
Before you take out a rent loan, it’s smart to check for other ways to get financial support. Some of these ideas may also help you improve your finances even if you do end up getting a loan. Here are some options you might want to try:
Communicate your challenges: Try being honest with your landlord. Let them know what’s going on and ask if they can work with you to find a solution. They might agree to a payment plan, give you extra time to pay or waive late fees.
Find ways to make extra money: If you’re able to work, try looking for new ways to supplement your income. Pet sitting, food delivery, or other part-time jobs could help you put more toward rent every month.
Make the most of local, city and state help: By dialing 211, you can connect with local support services. Representatives can help you find food, housing or emergency financial programs. Many cities and states also have programs that help people pay rent when money is tight. You could search online or ask your local services to learn more.
Stay on track with repayment
Once you are approved for the loan and pay your rent, stick to your repayment plan. To help, set alerts to remind you of your payment due date every month. You can also enable autopay, so your payment is always made right on time.
Being at risk of eviction is stressful — but there are tools that could help. A rent loan could give you a chance to stay in your home, catch up on bills and protect your future.
Notice: Information provided in this article is for information purposes only and does not necessarily reflect the views of theceoviews.com or its employees. Please be sure to consult your financial advisor about your financial circumstances and options. This site may receive compensation from advertisers for links to third-party websites.
