In January, I received an email from my apartment complex stating I could now divide my monthly rent into two payments via a product called Flex.

I would make the first payment on the first of the month and could choose when to make the second payment. This would help me pay rent on time, improve my cash flow and even build my credit history, the message added. Enticing, right?

It sounded familiar. “Buy-now, pay-later” plans, popular in the retail industry, operate similarly. With buy now, pay later, you pay for a purchase over a series of installments, usually with no interest, which can help manage the expense.

But needing to divide up a payment to afford something – especially on a line item as crucial as housing – could spell financial trouble for some renters.

Current state of rent

Picture this: Someone wraps a thick rubber band around your arm and pulls tight until the sensation goes from uncomfortable to downright painful. That’s what paying rent has felt like for many Americans over the last few years.

In 2022, a record 22.4 million renters spent more than 30% of their income on rent and utilities, a January 2024 report from Harvard University’s Joint Center for Housing Studies reveals. Of those renters, 12.1 million spent a staggering 50% or more, an all-time high.

By federal guidelines, these renters are considered cost-burdened (or severely cost-burdened, in the case of the 50% spenders). To be cost-burdened is to live in a world of limited choice. Should you pay rent or buy groceries or go to the doctor?

Joanne Danganan, an accredited financial counselor in Los Angeles – one of the most expensive rental markets in the country – says it’s common for clients to have more than 40% of their income tied up in rent, leaving every dollar in their budget accounted for and sometimes more.

“How much are you making versus how much are you spending?” she says. “If the math at the end is a negative number, you’re spending way too much.”

Installment plans

Companies like Flex, Best Egg and Jetty position themselves as part of the solution. Flex partners with thousands of U.S. rental properties to offer its line of credit, which it says can help soften the blow of rent with smaller payments that are easier to manage.

“By providing flexibility over the most significant recurring expense for most people, Flex is an important and valuable solution for renters navigating the complexities of the current and evolving rental landscape,” said Kala Nicholson, senior vice president of marketing at Flex, in an email.

Here’s how it works. You can apply for a line of credit or loan from one of these companies as long as you’re eligible – usually, your property manager must agree. If you’re approved, the company pays part or all of your rent on the first of the month by tapping the line of credit or loan. Then, you pay back what you borrowed to the company in one or more installments by the end of the month.

You won’t pay interest in the traditional sense, but the service isn’t free. The email from my apartment says I would need to pay a monthly membership fee of $14.99, plus a bill payment fee of 1% of my total rent. If your rent is $1,500, that’s about $30 in fees. If you repay Flex in 25 days, that’s an annual percentage rate of about 29%. Consumer advocates consider 36% to be the affordability ceiling on interest for a loan.

Some companies also report payment history to the credit bureaus, which can help build your credit score if you pay on time.

Danganan says these products may be an option for renters who have the money for rent but struggle to regulate their cash flow, like gig workers with unpredictable pay.

“I can see it as a tool that you graduate from eventually,” she says. “It should not be a permanent solution.”

Alternatives

If you don’t have the money for rent, paying in installments won’t help. It can even hurt, since the fees make your rent more expensive, and failure to repay the company can lower your credit score if the company reports missed payments.

Instead, look at your earnings versus expenses and consider adjustments. Picking up a side hustle, selling stuff you don’t need or getting a roommate are better solutions than financing, Danganan says.

If you still can’t afford rent, talk to your property manager or landlord as soon as possible, says Jeremy Lark, senior manager of program performance and quality assurance at GreenPath, a nonprofit credit counseling agency. They may be more amenable than you think, especially if you have a history of on-time payments. Some may offer payment flexibility without fees, he says.

The Department of Housing and Urban Development and 211.org can provide additional resources.

Finally, if you need rental assistance and aren’t sure where to start, a nonprofit credit counseling agency can help you assess options.

Jackie Veling is a writer at NerdWallet. Email: [email protected].