I’m having trouble paying my rent. Are the flexible payment options that split it in half a good idea?

As the average rent in Canada tops $2,000 a month for the first time, many Canadians are looking for ways to save money on housing, or at least free up their short-term cash flow.

Similar to buy now, pay later (BNPL) options at retailers, there are flexible payment options for your rent. Recognizing the mismatch between when rent is due (usually at the beginning of the month) and when your paycheck arrives (usually every two months), Canadian company Zenbase pays rent to your landlord at the start of each month, allowing you to divide the rent into two tranches.

The idea is that by splitting rent payments, you won’t be charged overdraft fees or insufficient funds. The insufficient funds fee at Canada’s big five banks can range from $45 to $48. Jordan Kaye, spokesperson for real estate agency Zolo, says your landlord could also charge an administrative fee for late rent.

Kaye says if a tenant is struggling to pay their rent each month and is facing NSF charges because their rent checks exceed their checking accounts, a rent now, pay later option could be beneficial.

But she warns that BNPL-style options could result in an additional $100 to $240 being paid out a year. (Zenbase charges $9.90 to $19.90 per month for its service. Tenants who pay their rent in full by one-third of the month won’t be charged.)

While Zenbase positions itself as a budgeting tool rather than a BNPL service, Jason Heath, managing director at Objective Financial Partners, nevertheless recommends that Canadians think twice before going into debt or an arrangement like BNPL. “From a global point of view, this means that consumers are borrowing money from their future to spend it today. It is all the more risky that an unforeseen event such as a job loss or a car repair will cause someone to go into even more debt and risk never being able to get out of it,” he says.

« If you’re struggling to pay your rent, your landlord may be able to help you by deferring your rent payment for several weeks or even a month, » says Kaye. « This was common during COVID, and often landlords are willing to work with good tenants and help them through the tough times. »

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