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Buy now, pay later housing giant Affirm is looking to help renters break mortgage payments in ways that fit their fortnightly payments.
Affirm is piloting a program in partnership with financial technology platform Esusu that will allow tenants to split their monthly rent into two equal payments every two weeks at 0% APR. There are no hidden or late fees, or compounding interest with this screening program, either, according to Affirm.
Esusu helps tenants build credit by reporting their rent payments on time to major credit bureaus.
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The pilot program is designed to give “eligible employers a flexible option to manage one of their biggest monthly expenses,” Affirm said in a statement to FOX Business, calling it “a transparent option that gives employers the flexibility to match their expenses and payments.”
An apartment with a rental sign posted in South Pasadena, California. (Frederic J. Brown/AFP via Getty Images)
Affirm said it documents every claim individually and only approves people for what it believes they can reasonably afford.
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“We approach this use case thoughtfully and evaluate it alongside Esusu, which shares our focus on transparent, consumer-first financial tools,” Affirm continued.
The pilot program is designed to give “eligible employers a flexible option to manage one of their biggest monthly expenses,” Affirm said. (Andrew Harrer/Bloomberg via Getty Images/Getty Images)
The company did not confirm when the pilot program will be officially launched as it is still in its infancy.
LendingTree’s senior consumer finance analyst, Matt Schulz, told FOX Business that this could be useful for those on a tight budget, but cautioned that it’s too soon to make a final decision.
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“This is another example of how it is becoming easier every day for people to use BNPL to fund anything,” said Schulz.
A “for rent” sign is posted in front of a home on June 15, 2012 in Richmond, California. (Justin Sullivan/Getty Images)
He mentioned that this does not seem to be a BNPL loan that pays to the four, which if it was, he warned that there could be serious risks. For example, Schulz noted that the buyer could still have people pay off the BNPL loan for the previous month’s rent when the next month’s rent is paid.
“That can be disruptive,” he said, adding that this financial tool can be really useful if used wisely, but “the danger with BNPL is that you have a lot of debt to manage.”
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“That can be difficult, especially if you are not used to managing debts,” he said.
Another important thing about this payment method is that it is tied to a debit card or checking account, so it is important that users have enough money in that account to pay the bill.
