Millennials are borrowing from startups to pay the rent

The high cost of living is leading millennial renters to take on debt

TRD NATIONAL /
May.May 13, 2019 12:30 PM
Median rent nationally hit an all-time high of $1,006 a month in the first quarter of 2019 (Credit: iStock)

Median rent nationally hit an all-time high of $1,006 a month in the first quarter of 2019 (Credit: iStock)

Who needs payday lenders and their sky-high interest rates when startups are more than happy to issue loans to millennial renters just scraping by in the share-economy?

StayTony, Domuso, Till and Uplift are among the startups issuing loans to recent college graduates and those with irregular paychecks, with borrowing rates that are often under 20 percent, the Wall Street Journal reported.

The downside is that it may lead young renters to live beyond their means. Because cities often have steep costs of living, the loans can affect borrowers’ credit scores and pile on long-term debt. 

The crop of startups is entering the field as housing costs have outpaced wages. Median rent nationally hit an all-time high of $1,006 a month in the first quarter of 2019, the report said. That’s led some renters to loans. Outstanding consumer credit, which doesn’t include mortgage loans, exceeded $4 trillion for the first time last year.

Some companies offer loans as a backup. Till, for example, pitches its financing as a tool to avoid evictions. Data on defaults is difficult to source, but the “serious” borrower delinquency rate on unsecured personal loans was 3.6 percent in the fourth quarter of 2018.

Still, there are considerable risks in issuing debt to consumers with inconsistent income. One, Rentlender, has already restructured, and another, Domuso, has already tightened its lending standards and won’t issue loans to renters with subprime credit. [WSJ] — Meenal Vamburkar


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

40 East 72nd Street (Credit: Google Maps)

Nightmare on E. 72nd Street raises question: Are small condos risky?

Jed Garfield of Leslie J. Garfield; Richard Grossman, president of Halstead Real Estate; Sarah Saltzberg, principal broker and CEO of Bohemia Realty Group; Douglas Elliman’s Howard Lorber

NYC brokers slam bias, promise action after Newsday exposé

The bombshell probe also found that minorities had to meet more stringent financial qualifications than white buyers. (Credit: iStock)

LI agents routinely discriminate against minority buyers, undercover probe finds

4650 Broadway (Credit: Google Maps)

Inwood site goes for twice what seller paid last year

WeWork co-CEOs Artie Minson and Sebastian Gunningham

WeWork under pressure as losses soar to $1.25B

Zillow CEO Rich Barton (Credit: iStock)

Zillow and Opendoor aren’t making much on home-flipping

arrow_forward_ios