At a Glance

The last thing anybody wants is to near the end of the month only to realize that they won’t have enough money to cover their rent payment. Fortunately, there are options available that can help you meet your payment assuming your landlord doesn’t grant an extension.

In this article, you’ll learn:

What is a rental loan?

For those unfamiliar with the term, a rental loan is a type of personal loan, either secured or unsecured, that provides you with a lump sum payment up front. While this sum of money can be put towards any purpose, one use of the funds can be to meet your rent payment. Be aware that once you receive the funds, you will be responsible for making monthly repayments that include an agreed-upon interest rate.

How do rental loans work?

Loans for rent work quite simply. Given that rent loans are a form of personal loans, here is what you can expect:

  1. Determine the exact amount you will need for the loan.
  2. Compare different lenders and apply for a loan.
  3. Receive approval and get the funds deposited.
  4. Pay your rent.
  5. Begin repayments on a monthly basis, including any interest or portions of fees.

The monthly payments that you make will continue for the entire life of the loan, with the tenor of the loan depending upon the agreed upon contract between you and the lender.

Pros and cons of rental loans

As with all loan types, a loan to pay rent comes with certain pros and cons. Here are some of the most prominent to consider:

Pros Cons
  • Quick access to much needed cash
  • Additional fees may be present
  • Fair interest rate if you have a good credit score
  • Your credit score can be negatively impacted if you can’t meet payments
  • Potential improvements to your credit score if payments are met
  • Your overall debt level will increase
  • Typically, more affordable than other financing options
  • Potential higher interest rate if your credit score is lower

Types of loans you can use to pay rent

While a personal loan is the primary type of loan for rent payment, there are several different options you can consider for financing:

1. Personal loans

As mentioned above, personal loans are the primary loan type when seeking an emergency loan for rent. This form of financing will provide you with a lump sum of money up front. From that point on, month after month, you will be responsible for meeting repayments. The average personal loan can have a tenor anywhere from two to seven years and interest rates ranging from 6% to 36% depending on your credit.

Due to this variability, personal loans are most effective when you have a good credit score and strong history with credit. Additionally, a substantial form of income to support repayments will be very beneficial in securing the loan and better terms.

Discover how personal loans can help save you money

Learn the ins and outs of personal loans

2. Payday alternative loans

Payday alternative loans are a specific type of personal loan for rent that should only be taken on if you have absolute certainty the repayment can be met in time. Payday loans allow you to take a sum of money out with a short tenor, typically just a couple of weeks, but it comes with a large interest rate.

They are called payday loans since most lenders set the due date as the time of your next paycheck. The trap of payday loans is that if you cannot meet the payment by the due date, the loan can be rolled over with a large interest rate attached. For this reason, only take on a payday loan if you are sure you can meet the payment in one cycle.

Related: How to get out of payday loan debt?

3. Emergency loans

Emergency loans are a subset of personal loans that are meant for small, quick expenses that you need funds for. In general, the loan amounts offered by emergency loans are far smaller than a standard personal loan. For loans to help pay rent, emergency loans may be useful, but if your rent is higher than normal a standard personal loan may benefit you more.

Learn more: Emergency loans

Are rent loans a good idea?

Since loans for rent assistance will come with an interest rate, potential fees, and other costs, it’s usually only a good idea to take one out as a last resort. It will make the most sense to take out a loan for rent if you are experiencing a setback, are expecting a promotion, or have funds already on the way that have not yet arrived.

Alternatives to a rent loan

If financing using a personal loan isn’t right for you, there are several alternatives that you can consider using:

1. Credit cards

Putting your rent payment on a credit card can be a tempting option when you are short on cash. However, be aware that putting this cost on your credit card will require you to pay a larger interest rate over time if you are unable to meet the payment in one billing cycle. Your credit card limit may not even be high enough to meet your rent payment depending on the card you have.

Related: How to get a low-interest rate credit card?

2. Borrow from friends and family

If you can, consider borrowing money from friends and family. This strategy will allow you to avoid paying extra fees or interest. However, be sure to always pay your friends and family back to avoid placing a strain on relationships.

3. Rental assistance programs

Rental assistance programs are available to some qualifying persons. Research rental assistance programs in your area to see if you qualify.

4. Move to a more affordable location

Rent loans for bad credit are challenging and can result in an interest rate that is far too high to be reasonable. In this situation, simply moving to a more affordable location may be the best option to consider.

5. Improve your income

At the end of the day, improving your income level is the fastest way to meet your rent payment and have extra money left over for discretionary purposes. Consider an internal move through a promotion that allows you to raise your income or seek work elsewhere that may pay a higher level.

6. Try a roommate

In the event your income level won’t reach what you need it to, consider rooming with somebody to reduce the cost of your rent. Inquire with friends and family to see who may be willing to live with you. There are also countless accredited groups online where you can find roommates quickly and safely.


Yes, loans can be used for rent payments. However, using a loan for your rent payment should only be done as a last resort due to the higher overall cost. This cost results from the interest rate you agree upon along with any fees that may be attributed to the loan.

With a good credit score and solid history of credit, securing a loan for rent payments is not overly difficult. Just be sure that you can meet all payments required to avoid any damage to your credit score.

Generally, the best type of loan for rent payments will be an emergency loan or standard personal loan. This assumes that you have good credit. These two loan types will result in a lower interest rate than other types and typically have more fair terms.

Yes, taking on any form of debt will affect your credit. If you meet all your payments on time and in full, your credit score will likely improve over time. However, if you fail to meet your payments then you will see your credit score rapidly decline.