What is Rent Now, Pay Later?

Rent Now, Pay Later (RNPL) is a type of short-term financing that allows Tenants to pay a lump sum towards the rent and pay the amount in monthly periodic installments on a future date.

Using RNPL financing can be convenient for both tenants/landlords.

Key Takeaways

• Landlords can get an upfront down payment for the yearly rental, which securities a rental income for the whole period.

• Tenants can avail of discounts by providing the desired pricing on the letwizard.com platform from the landlords and spread their payments over monthly periods.

• Financing will be provided by the desired banking partners spread over a future date.

• Holidays or short terms rental stays can be financed, and the repayment will be spread over the installment period.

• Typically, RNPL doesn't affect your credit score; however, late payments or failing to pay can damage your credit score.

How Rent Now, Pay Later Works

Rent now, pay later rental financing programs installment loans operate along the following lines:

• If you like a property, you wish to rent and opt for Rent now, pay later at checkout.

• If approved (you're told in seconds), you make a small down payment, such as 25% of the overall rental amount.

• You then pay the remaining amount due in a series of periodic installments.

• You can pay via direct debit from your bank account or periodic bank transfer; payments can also be deducted from, or credit card automatically.

Although they both involve delayed payments, RNPL differs from credit card purchasing. When you use a credit card to pay for things, you must only make the minimum payment due on the card each month. Interest accrues on the remaining amount (unless you've used a card with a 0% introductory APR) until you pay it off in full. But you can carry a balance indefinitely.

In contrast, RNPL arrangements often have a fixed repayment schedule of principal plus interest, generally several weeks or months. You're told upfront what you'll need to pay each time, and it's usually the same amount. It's comparable to any other sort of unsecured personal or consumer loan.

Credit Checks

Most Rent now pays later products only require a soft credit check for approval, which doesn't affect your credit score. However, some providers may conduct a hard pull of your credit, which could knock a few points off your score temporarily.

Some Rent now, pay later loans are reported to credit bureaus. If a financial institution sends this information, the loan can show up on your credit reports, which could impact your credit score.

It is always advised to understand the difference between these rates and discuss it with your bank or your mortgage broker before choosing a suitable mortgage option.