Splitting your monthly rent payments in half is a good idea if you're strapped for cash -- and so many people are these days -- but they bring possible dangers, a real estate expert says.
A number of people are using "split pay" arrangements with credit companies -- in which the tenant pays the creditor half the month's rent on the first of the month, then the credit company sends the full rent to the tenant's landlord, followed by the tenant paying the other half to the creditor on the 15th of the month.
The problem is the fees the tenant will pay in order to make the loan, up to $30 a month. Those fees can be rather high.
Mariposa Group Real Estate CEO Caralee Gurney says people strapped for cash would be better off finding a roommate to better afford the rent.
"Really, because if you can't afford the house, it doesn't make sense to rent the place, it makes sense to get a roommate who can split the rent with no fees," she says.
Some say the amount paid in fees for such credit help in paying the monthly rent is troubling because it's high enough to resemble the payday loans that have been under scrutiny by lawmakers for years because of their fees.
"I'm sure some people think paying the fees are helping, but in the long run it could actually hurt their credit" to shell out for "split pay" loans, Gurney says.
The biggest danger is if, for any reason, you can't make that second payment of the month.
Even if it's an emergency it can result in lower credit ratings and scores, and that she says is very concerning.
She advises people to use extreme caution when entering into "split pay" arrangements.