Can You Use a Personal Loan to Pay Rent?

Jason SteeleUpdated February 20, 2025

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You can use a personal loan to pay rent, but that doesn’t necessarily mean you should. Taking out a personal loan for rent should be a last resort, since the average personal loan interest rate is relatively high. However, using a personal loan to pay rent could make sense in certain circumstances as long as you have a plan to pay off the loan promptly.Here's what you need to know about using a personal loan to pay rent.

What Is a Personal Loan?

A personal loan is a type of loan from a bank, credit union, or online lender that can be used for a variety of purposes. Personal loans give you a lump sum that you repay in regular monthly payments with interest over time. Once you’re approved for a personal loan, you may expect to receive funds quickly, typically within one to five days. Personal loans can be secured or unsecured. Unsecured personal loans don’t require collateral, so lenders typically look at your credit to determine whether to approve you for a loan. Secured loans require collateral but are usually easier to qualify for. However, if you default on a secured loan, you could lose your collateral.Recommended: Types of Personal Loans: Pros & Cons of Each

Personal Loan Uses

Personal loans are flexible and can be used for many purposes. Some common personal loan uses include paying off medical bills, making a large purchase, and consolidating debt. You could also use a personal loan for home improvement. However, you shouldn’t use personal loans for a down payment on a house, higher education costs, business expenses, or investments. Most lenders prohibit you from using personal loans for these purposes.

Using a Personal Loan for a Rent Payment

If you want to use a personal loan for a rent payment, the first thing to do is decide on a lender. You can apply for a personal loan online or in-person. An online personal loan is also sometimes referred to as a paperless loan because you can apply and receive a loan without submitting or signing any paper documents. Some online lenders let you pre-qualify to check if you would potentially be approved for an online personal loan, and what your interest rate might be. You can apply for a loan in person at a bank or credit union. To find the best in-person loan option, you should evaluate multiple offers from different lenders. You can compare the costs, terms, interest rates, and features to find the one that best matches your needs. You will also need to decide what type of personal loan to apply for. If you are using a personal loan to pay for rent, you may not have collateral to offer, so you will likely want to go with an unsecured personal loan. After filling out your application, the lender will run a credit check and will verify your employment and income to help decide whether to approve you for a personal loan.

Advantages of Using a Personal Loan to Pay Rent

One benefit of using a personal loan to pay rent is that the loan may provide you with extra time to pay your rent. For instance, say you just got a new job and you’re waiting to be paid. Or maybe you’re moving into a new apartment and need to put down money for a security deposit, plus rent. A personal loan could provide a temporary solution if you know you will have the money to pay off the loan soon. Another advantage is that a personal loan may help build your credit as long as you make your loan payments on time. Personal loans also typically have wide borrowing ranges, from $1,000 to $50,000 or more. The amount you will be approved for is typically based on factors like your credit score and income.Recommended: Using a Personal Loan for Tiny Home Financing

Disadvantages of Using a Personal Loan to Pay Rent

There are a number of disadvantages to using a personal loan to pay rent. Because personal loans charge interest, you’ll pay more for the money you borrow. That can add up over time, depending on the length of the loan. A personal loan will also add to your debt. Each month you’ll need to make a loan payment until the loan is fully paid off.In addition, you’ll typically need a good credit score and strong credit history to get the most favorable interest rate and loan terms. And if you miss loan payments, your credit score may be negatively affected. Payment history is an important factor in determining your credit score.When deciding whether to use a personal loan to pay rent, you should weigh the advantages and disadvantages.

Advantages	Disadvantages
Provides extra time to pay your rent	Interest makes it so you’ll end up paying more in the long run
May have wide borrowing ranges	Increased debt load
Collateral may not be required	You have to qualify for the personal loan
May help build credit history	If you miss loan payments, your credit can be negatively impacted

Alternatives for Financing Your Rent Payment

If you are having trouble paying your rent, your first step should be to check with your landlord to see if they can give you extra time to make your payments. If your landlord won’t work with you, there are other alternatives for financing your rent besides personal loans.

Credit Card

One option is to pay your rent with a credit card, as long as your landlord will accept credit card payments. Some landlords may charge you a fee to pay your rent with a credit card. Even so, this may buy you some time. If you can qualify for a 0% intro APR credit card, you won’t be charged interest during the introductory period. Just try to pay off your balance before that time period ends.

Payday Loans

Payday loans are usually short-term loans for a small amount. However, they typically charge high fees and have difficult repayment terms. Payday alternative loans are also short-term loans for a small amount, and they are offered by some federal credit unions. Payday alternative loans have high interest rates, but not as high as payday loans. However, payday alternative loans can be more difficult to qualify for and are only available to qualifying members of the credit union.

Get a Roommate

Sharing living expenses with a roommate can significantly reduce your financial burden and help manage rent payments more easily. By splitting the cost of rent, utilities, and other household expenses, you can free up more money for savings or other essentials.

Hardship Loans

If you are in a desperate financial situation, you could look into hardship loans or deferred personal loan payments. A hardship loan is a personal loan that allows you to borrow money during a time of financial crisis. Loans with deferred payments let you postpone monthly payments without incurring late fees or damaging your credit. Both of these could be options if you are in a financial emergency and need money to pay rent. Recommended: Guide to Deferring Personal Loan Payments

The Takeaway

You can get a personal loan to pay rent, but it can be an expensive option because of interest charges involved. If possible, explore other alternatives first, including speaking to your landlord to ask for more time to pay your rent. However, in certain circumstances, taking a personal loan may be necessary to get your rent paid. Weigh your options carefully.

Frequently Asked Questions

Is it smart to take out a loan to pay bills?

Can you use personal loan money for anything?

What payment methods can you use to pay rent?

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About the Author

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.

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