When your rent payment for your current or new accommodation is due, it may be expedient to take a quick or short-term loan if you’re experiencing a temporary setback financially or the cost of the additional expenses, including legal and/or agency fees for renting a new accommodation, is unavailable. In such situations, taking out a short-term loan to cover your rent payments may seem like a viable solution.
However, while borrowing money to pay for rent can provide short-term relief, it’s essential to understand the potential consequences and make an informed decision. Taking on debt can add to your financial stress and may impact your long-term financial goals. Additionally, not all loans are created equal, and borrowing from unregulated lenders can put you at risk of fraud or predatory lending practices.
Using a short-term loan for your rent payment in Nigeria has its pros and cons. It is important to use licensed and regulated loan services like KwikPay Credit for your installment loans for rent payments. This article will explore the benefits and drawbacks of using a rent loan, as well as alternative options to consider if you want to avoid paying interest and fees.
Pros of Using a Loan for Rent Payments in Nigeria
1. Quick access to cash: Some licensed and regulated loan services like Kwikpay Credit can disburse your loan funds within minutes of applying if your rent is overdue or due soon.
2. Can be cheaper and less stressful: Using a rent loan from a licensed loan service may be cheaper and less stressful. In most cases, all that is required is to complete a few minute digital application form, and the loan is approved, subject to terms and conditions. Most regulated loan providers also operate ethically within the confines of the law of the Federal Republic of Nigeria.
3. Flexible loan terms: Licensed lenders usually offer terms that can range from one to twelve months. A longer loan term may reduce your monthly installment payments, but you’ll pay more interest over the life of the loan.
Cons of Using a Loan for Rent Payments
1. Adds debt: Taking a loan for rent payments adds debt. Having to repay a rent loan on top of your future expenses can reduce your cash flow, making it harder to achieve your financial goals.
2. Short-term Loans cost more: Many short-term loans from loan companies in Nigeria generally cost more in terms of interest rates and other charges. The total loan cost is usually more if the loan tenure is longer. It is usually advisable to repay the loan earlier, especially for a 1-year rent.
3. Fees: Some lenders in Nigeria may charge you origination fees, management fees, and penalties for late repayments. Be sure to inquire about fees before signing the loan agreement; these fees can increase your borrowing costs or reduce your loan amount.
4. Potential damage to your credit report: defaulting on the loan or missing a payment can damage your credit history, making it difficult to qualify for future loans.
Alternatives to Rent Loans
If you want to avoid paying the interest and potential fees of a rent loan, consider these alternative options to cover your rent payment:
1. Borrow Money from Family or Friends: A family loan or loan from a friend can help you minimize the amount of interest you pay versus taking out a rent loan. Be sure to repay the loan as agreed to maintain a healthy relationship with the family member.
2. Move to a Cheaper Flat or Location: Rents are generally cheaper on the mainland of Lagos compared to the Island in the commercial capital of Nigeria. In some instances, you can get a 2-bedroom accommodation rather than a 3-bedroom, to cut down the cost, if you do not necessarily require, a large apartment.
3. Get a Roommate: Getting a roommate to share in the payment of rent can help make the cost of rent and other living expenses more affordable for you.
4. Cut down on your spending: One way to free up some much-needed cash for rent payments is to cut back on unnecessary expenses like entertainment, gym memberships, transportation costs, cable subscriptions, etc.
5. Supplement Your Income: If you don’t want to move to a cheaper location or get a roommate, you should focus on boosting your income with other sources of income. To increase your income, consider picking up a lucrative side business or hustle. The extra income might be enough to help you meet the rent payment.
You can receive a short-term loan with the help of KwikPay Credit, one of the registered and licensed digital and one of the best loan app providers in Nigeria. Simply choose how much you want to borrow and how long for, fill out our quick and simple application form on the web at www.kwikpaycredit.com or through our mobile app, and we will do the rest.
Kwikpay Credit is the trademark trading style of Trafalgar Associates Limited, a licensed and registered digital lender with the Federal Government of Nigeria’s FCCPC, and a member of the Money Lenders Association. As a trusted lender, we have been offering short-term loans for the past decade, to individuals and businesses (MSMEs) in Nigeria.