New Breed of Lenders Helping Pay the Rent
Several startup companies are offering loan products meant to help people pay their rent. From an article in the Wall Street Journal:
These companies, which also include Domuso and Till, are entering a market long associated with payday lenders. Compared with cash-advance loans, which come with annual interest rates as high as 700% in some states, funds from the rent-lending startups are available at much lower cost. Some are competitive with credit-card borrowing rates at less than 20%...
Other companies offering rental loans see their products as a backup for tenants in more precarious circumstances. Till, which advertises its loans as much cheaper than those of payday shops, pitches rental financing to renters and landlords as a way to avoid evictions.
Data on how often renters default on their loans is hard to come by from third parties, and most of the rental-lending companies won’t share such information. Some lenders say one measure could be the “serious” delinquency rate on unsecured personal loans, which is defined as borrowers who are more than 60 days behind on payments. It stood at 3.6% in the fourth quarter of 2018, according to the credit agency TransUnion.