Late on Rent? Here’s What You Should (And Shouldn’t) Do
A fast cash loan can be an okay option, but talking to your landlord is a much better one.
What’s the best part about having an apartment? Well, it’s probably the shelter, warmth, and a place to display your collection of Hugh Jackman bobble-heads. The worst part about having an apartment, on the other hand, is having to pay rent. And you don’t only have to do it once, or even once a year. You’re paying it every month!
Then again, if you don’t pay your rent, then you don’t get to live in your apartment anymore. That’s literally how renting an apartment works. (We checked.) That’s why, when people find themselves without the funds to cover their upcoming rent check, they tend to freak out. After all, they’re facing potential eviction!
But don’t panic! We spoke to the experts to find out what your options are if it’s looking like you’re going to be late on rent.
Cautiously consider a credit card cash advance.
Obviously, you never want to use your credit card on frivolous things you can’t afford. But “shelter” is not a frivolous thing. In fact, it’s kind of a tippy-top priority. So while using your credit card to spend money you don’t currently have can be a dangerous choice, it might the least-terrible option for making up a small shortfall in available funds.
“Thankfully, having a low bank balance doesn’t always have to mean the end of the line for you in terms of paying your rent and there are a lot of options still available to you,” says Nate Masterson, finance manager for Maple Holistics (@MapleHolistics).
Using a credit card is one of those options. Of course, you can’t just hand a credit card over to landlord and ask “chip or swipe?” You’ll probably have to take out a cash advance.
“In most cases, the usual thing to do is draw the remainder of the cash with your credit card and deposit that into the relevant savings account in order to ensure that you have enough cash to make the transfer.”
There are two big risks with a credit card cash advance. First, the interest rates for these advances are always going to be much higher than your standard interest rate. Second, that interest doesn’t come with a one-month grace period like regular transactions. It starts accumulating immediately.
Still, if the choice is between eviction—or even just a derogatory mark on your credit—and paying some extra money toward your credit card bill? It’s barely a choice at all.
Don’t have a credit card? There may still be some tricks to consider.
A bank overdraft will get you funds, but are the fees worth it?
Depending on the options your bank offers (assuming you have one) you may have another option for making up your rent money shortfall. A bank overdraft is an easy way to get cash, but the price you’ll pay is pretty dang high. Masterson explains:
“You might be able to set up an overdraft on your account to ensure that even if the transaction goes off without there being enough to make the initial payment, you can rest assured knowing that the leftover amount will fall within the range of your overdraft, thus covering the payment.”
Still, he urges caution:
“Although credit cards and overdraft are great in a sticky situation, you should never become too used to relying on them with things like rent payments as they might incur hidden costs with frequent use later on, so always be sure to double check any outstanding credit on your credit card and ensure that your overdraft is covered first thing in the next month to save cash and time.”
Masterson is right. Regular reliance on cash advances or bank overdrafts could leave you stuck in a spiral of debt, similar to a predatory no credit check loans. In fact, a bank overdraft can come at a much higher cost than your standard payday loan! According to the CFPB, “if a consumer borrowed $24 for three days and paid the median overdraft fee of $34, such a loan would carry a 17,000 percent annual percentage rate (APR),”
When your only options amount to different kinds of bad credit loans, you always have to be super careful not to let your debt spiral out of control. But don’t worry, because those aren’t your only options. There are choices out there that don’t involve paying sky-high interest rates. Plus, you don’t necessarily have to figure it all out on your own.
Talk to your landlord.
Don’t want to get evicted? Well here’s a crazy little secret: Landlords don’t want to evict you either. There are lawyers and fees and it’s likely their option of last resort. That’s why they worked so hard on the front end to make sure you could afford the rent payments. Odds are, they’d rather work something out with you if possible, rather than paying to get outside forces involved.
“Immediately tell your landlord, propose a reasonable payment plan, and make the payments as agreed,” explains Nancy Gaines (@NancyLGaines), CEO and founder of Gain Advantages Inc and a landlord herself. “This is not the time to ignore the problem or you could be facing eviction. Instead, it’s all about communication. When this occasionally comes up for me as a landlord, I let my residents pay half now and half mid-month. To keep them accountable to the plan, I either have them text me a picture of the money order they are sending OR have them PayPal me the money on the agreed upon date. Serious renters will stick to the plan.”
“Stop thinking of the landlord as ‘the lord of the land.’ It is an antiquated notion. Approach him or her as a business owner would approach a banker in search of financing: be optimistic as to how an infusion of cash (or relief on mandated payments – same thing) will help make your business stronger and you a better risk as a tenant. Approaching the landlord with your empty pockets turned inside out and begging is not going to get you the help you are looking for and will spook the landlord – exactly the opposite of what you want.
“Tell the landlord what you will do with your rent relief: marketing, re-merchandising (for retail), or otherwise retooling the business to make it leaner and meaner. Propose the method and schedule of payback and offer a little bit of interest.
“And always make the schedule a little longer than needed. If you pay off the loan earlier, the landlord will consider the assistance he or she extended a good investment.”
If you’re going to miss your rent, remember one thing: You’re not alone. Don’t be afraid to ask for help if you need it. Talk to your friends and family, figure out your best option, and—presto—you’ll be going places! Or rather, you’ll be staying in your apartment, and therefore … not going anywhere at all.
To learn more about how bad credit can affect your living situation, check out these related posts and articles from OppLoans:
- How to Get an Apartment With Bad Credit
- How Bad Credit Can Affect Your Utilities
- Cash Advance or a Late Bill? What’s Worse?
|Nancy Gaines (@NancyLGaines) is CEO/Founder of Gain Advantages Inc. and has been advising small businesses and Fortune 100 companies how to increase revenues through proven systems for almost two decades. She is a best-selling author and international keynote speaker. Nancy has been named in the Top 100 Productivity Experts to follow on Twitter and has a global podcast downloaded in over 75 countries.|
|Nate Masterson is the Marketing Manager for Maple Holistics (@MapleHolistics). Nate specializes in Digital Marketing and SEO and works as a freelance marketing consultant for small businesses in his free time. Nate is from Riverdale, NY.|
|Aaron Weiner is Executive Vice President with The Tenant Group (@TheTenant_Group). Aaron brings four decades of experience in commercial brokerage, development, and property management to the service of his commercial clients, guiding them through critical real estate decisions, site selection, lease negotiation, premises build out, and lease administration.|
The information contained herein is provided for free and is to be used for educational and informational purposes only. We are not a credit repair organization as defined under federal or state law and we do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit. Articles provided in connection with this blog are general in nature, provided for informational purposes only and are not a substitute for individualized professional advice. We make no representation that we will improve or attempt to improve your credit record, history, or rating through the use of the resources provided through the OppLoans blog.