More Americans Use Buy Now, Pay Later Loans for Rent, Food

"Buy now, pay later" loans, once marketed mainly for small purchases like electronics and clothing, are increasingly being pitched to consumers as a way to cover essential expenses such as rent, groceries, utility bills and medical costs.

Consumer advocates warn that using BNPL loans for necessities is risky, saying lenders sometimes obscure the potential costs. A poll from the nonprofit Protect Borrowers found many BNPL users report using the loans to cover rental or housing costs.

Ariel Nelson, senior attorney at the National Consumer Law Center, said the trend reflects broader affordability struggles among Americans hit by years of high inflation. "At best, [BNPL loans] can act as a temporary Band-Aid. Even then, they are not risk-free," she said.

BNPL loans emerged in the 2010s and took off in the early 2020s, letting borrowers split purchases into installments — typically four payments over weeks or months — without a credit check. In 2025, Americans borrowed $160 billion through BNPL loans, roughly double the amount from two years earlier, according to Federal Reserve economists. More than $96 billion of that was issued without interest.

A LendingTree survey found 54% of BNPL borrowers say they couldn't make ends meet without the loans. Nearly 30% used them for groceries, up from 14% two years earlier, and 23% used them for medical, dental, veterinary or rent expenses.

Some lenders now offer products specifically for essentials. Affirm launched a pilot in January letting renters split monthly payments into two installments through a partnership with Esusu Pay, charging a membership fee of $35 to $50 a month. New York-based Flex lets customers split rent, utilities, phone, internet and car payments, charging a $6 monthly fee plus 3% of the loan amount and a 0.5% processing fee.

Consumer advocates say the products can drive people deeper into debt, particularly when borrowers juggle multiple loans with overlapping repayment periods, since automatic bank withdrawals can trigger overdraft fees. "The products are structured so they seem like they're low cost, but actually they're not," Nelson said.

Flex's Ryan Metcalf described the loans differently, saying they help renters whose pay schedule doesn't match bill due dates. "We're not selling money, we're selling time," he said.