Should You Take a Personal Loan to Pay Rent in Nigeria?

When tough financial times arises (like job loss, delayed salary, or a big financial emergency), many Nigerians may find themselves struggling to meet basic needs, including paying rent. One tempting option is taking out a personal loan. But is it really a good idea?

While it’s possible to get a loan to settle your rent, it should not be your first option. Loans come with high costs and potential long-term consequences, especially when taken for recurring expenses like rent. Here’s what you need to know.

Why Taking a Loan to Pay Rent Is Risky

Taking a loan to pay rent may solve a short-term problem, but it often creates bigger long-term issues:

1. You’re Adding Debt on Top of Rent

If you take out a loan to pay ₦600,000 for six months’ rent, for example, and the lender charges 20% interest over 12 months, you’ll not only owe your landlord but also have to repay the loan in monthly installments of about ₦55,000—on top of your other living expenses.

2. Interest Payments Add Up

Loans from microfinance banks or online lenders in Nigeria (like Carbon, FairMoney, or PalmCredit) often come with high interest rates ranging from 20% to 45% or more. That means you could end up repaying far more than you borrowed—sometimes as much as two extra months of rent in interest alone.

3. You Need a Good Credit Record

To access a reasonable interest rate, you may need a good credit history with credit bureaus like CRC Credit Bureau or FirstCentral. Many Nigerians don’t have a formal credit record or score, limiting their access to affordable loans.

4. Loan Default Can Hurt Your Financial Future

Defaulting on a loan can lead to harassment by loan recovery agents (common with some loan apps in Nigeria), public shaming via SMS, or blacklisting by credit bureaus. This could affect your ability to borrow in the future—even for something urgent or important.

When It Might Make Sense To Take a Loan

While risky, a small loan might make sense under very specific conditions:

• You’re changing jobs and your new salary is guaranteed to start in a few weeks.
• Your landlord insists on a full-year rent upfront, and you only need a small top-up to meet the total amount.
• You’re moving into a new apartment and waiting for your previous landlord to refund your caution fee.

In such cases, borrowing a small amount with a clear repayment plan may be manageable—especially if it’s a one-time gap.

Better Alternatives to Taking a Loan

Instead of going into debt, consider these friendly alternatives:

1. Negotiate With Your Landlord

Some landlords in Nigeria may be flexible, especially if you’ve been a reliable tenant. Ask for:

• A payment extension
• Monthly or quarterly rent arrangements (instead of a lump sum)
• Waived late fees if you can pay part now and the rest later

2. Look Into Cooperative Societies or Staff Unions

If you work with a company or belong to a cooperative (popular in civil service and trade associations), you may be able to get a low-interest soft loan or even a rent advance.

3. Seek Support From Religious or Community Groups

Churches, mosques, or town unions often support members facing financial difficulties. Don’t be afraid to reach out—some offer grants or interest-free loans for things like school fees, hospital bills, and yes, even rent.

4. Move Temporarily

If your financial situation is truly tough, consider:

• Moving in with a trusted friend or family member temporarily while you regroup.
• Subletting a room in your apartment (if allowed) to ease the financial burden.
• Downgrading to a more affordable flat or a shared living arrangement.

5. Side Hustle or Gig Work

If you’re physically able, consider short-term income sources like:

• Delivery services (e.g., Gokada, Jumia Food)
• Online gigs like tutoring, freelance writing, or selling on social media
• Weekend work such as event staffing or helping at local markets

6. Borrow From Family or Trusted Friends

Yes, it’s tough to ask, but borrowing from people who trust you could save you from harsh loan terms. Just be sure to agree on how and when you’ll pay it back to avoid damaging relationships.