With rents skyrocketing across the country, more consumers may be struggling to muster three payments that often come with renting a new apartment: a real estate agent’s commission, one month’s rent and a security deposit.
Trotter, a relocation platform that connects consumers with rental agents in a number of U.S. cities, has unveiled a payment service that can make it much easier for renters to scrape those funds together.
“TimePay” will finance a renter’s security deposit and rental agent fees, sending payments directly to the renter’s new landlord and rental agent. The renter then pays back the loan, plus interest, over a 12-month period through automatic ACH debits.
The standard interest rate for the financing is 3.8 percent, said Trotter co-founder Clara Arroyave. Trotter funds the payments through a partner credit union that she declined to name.
The company is rolling out the payment service to clients who use its relocation services, but sees opportunity to serve it up to renters everywhere, she said. Trotter’s relocation service covers Boston, New York, Chicago, Miami, San Francisco and Washington, D.C.
“As long as we can scale the agent-vetting process then we believe this is something we can expand quickly,” Arroyave said. “We think that the National Association of Realtors can be helpful here.”
Real estate agents part of Trotter’s relocation network will be able to use TimePay as a tool to better serve clients, Arroyave said.
“An agent can request TimePay on behalf of his renter,” she said. “Then the renter will apply for TimePay with the same characteristics as if applying for a regular loan.”
Landlords won’t have anyway of knowing a renter is using the financing unless a renter or real estate agent chooses to disclose that information. Theoretically, that could cause some landlords to unwittingly take on tenants who aren’t as financially secure as they might assume.
Arroyave said a real estate agent working with a client who uses TimePay is “free and encouraged to disclose that with the landlord up to his convenience.”
She added, “Both incentives are aligned for the closing (landlord and agent) so we encourage transparency in this process.”
Trotter says TimePay is an original service. But it’s far from the only firm working to provide more financial flexibility to renters.
RadPad, RentShare and RentMoola are among payment services that let tenants pay their monthly rent online. A number of these companies provide the service for free if the renter uses a debit card and don’t require a landlord to sign up.
Some also let renters use credit cards to cover their rent, typically charging a processing fee close to 3 percent.
Recent activity in the online payment industry has spurred speculation that rent payment services could soon see mass adoption.