Affirm To Offer Buy-Now, Pay-Later Loans For Monthly Rents Through Esusu Partnership
A major player in buy-now, pay-later loans plans to offer its installment services to apartment tenants to help them pay their monthly rent.
San Francisco-based Affirm will offer the service through a partnership with New York-based financial technology company Esusu, Payments Dive reported. The service will be a pilot program for Affirm, according to a company spokesperson.
It is listed as “coming soon” on the Esusu website, which also says the service is subject to eligibility.
The service will give renters the flexibility to align rent expenses with their paychecks, according to the Affirm spokesperson.
“Select renters who choose to use Affirm through Esusu can apply to pay rent in two equal payments every two weeks at 0% APR, with no hidden or late fees, or compounding interest,” the spokesperson said in a statement to Bisnow.
Affirm’s website says that while it doesn’t charge late fees, missed and late payments could affect customers’ credit. It could also limit customers’ access to new plans with the company.
The pilot program comes after rent growth slowed on the national multifamily market but ended the year at a post-pandemic high of just under $1,900 per month, according to the latest report from Cushman & Wakefield.
National asking rents increased by 1.1% year-over-year, according to the report. Annual gains were lowest in the Sun Belt and the West, where they rose by 0.1% and 0.5%, respectively.
However, Cushman & Wakefield projects rents will recover over the next few years as demand has held firm and supply pipelines have shrunk.
Buy-now, pay-later lenders like Affirm are often “under pressure to scale” their businesses, and they often partner with companies with similar goals, Consumer Federation of America Director of Financial Services Adam Rust told Payments Dive.
Esusu aims to help clients build credit and strengthen their economic stability, according to its website. Rust said those are admirable goals, “but driving people to fintech lenders could pose issues.”
The use of short-term installment loans to pay monthly rent could leave tenants struggling with future bills, National Consumer Law Center senior attorney April Kuehnhoff told Payments Dive.
“There are a lot of questions about how this would work and what this means for consumers and tenants,” Kuehnhoff said.
The Affirm spokesperson said the company is working with Esusu to evaluate each application individually to only approve customers for what “they can responsibly afford to repay.”
A report on the buy-now, pay-later market released by the Consumer Financial Protection Bureau in December says late fees were assessed on just over 4% of these types of loans in 2023.
