What Is Funeral Financing?
You can take out a personal loan to pay for funeral expenses in the same way that you pay for a car or a home.
As with any other kind of loan, you are responsible for meeting repayment terms.
Advantages and Disadvantages
Funeral financing can be an excellent way to secure funding either in preparation for your own funeral expenses or those of a loved one.
There are many benefits to funeral financing. However, there are many potential pitfalls, too.
There are a number of reasons that a funeral loan may be preferable to other types of funding.
The biggest advantage to a funeral loan is that you can secure funding relatively quickly.
It usually takes only 1-3 days from the time you apply to when you can access the payout.
Flexible repayment terms
Funeral financing allows you to set the terms of repayment based on your financial situation.
You may choose to make small payments over a long period of time, or pay it off early if you prefer.
No collateral required
Different from car or home loans, funeral loans do not require any collateral.
They are based solely on your credit score and your ability to pay. If you have a good track record with the lending agency, that can help, too.
Good interest rates with good credit
If you have a good credit score, getting a funeral loan could be worthwhile.
That’s because you won’t find yourself paying out a lot of extra towards the interest and can focus on paying down the principal of your loan.
Don’t need to use savings
A funeral loan can free you from using up your retirement savings.
That way you can actually enjoy retirement just as you planned.
After all, no one should have to choose between paying for their funeral and living happily during retirement.
It’s important to keep in mind that funeral loans are not for everyone.
In certain situations, you may be better off securing funding from another source.
One of the biggest “cons” is potential high interest.
Because there is no collateral with a funeral loan, lenders often have to charge high interest rates to ensure a good return on their investment.
It may be especially hard to get a loan with a good interest rate if you have poor credit.
The Best Funeral Loan Companies
If you’ve decided to seek funeral financing, you may feel slightly overwhelmed by the available choices.
Not all loan companies are the same.
Here are some loan companies that are trustworthy and may be able to help you.
Prosper.com personal loans
This company promises a low, fixed rate. It also allows you to check your interest rate online instantly.
Loans are granted for three-year or five-year terms, and can be paid off early with no penalty.
This is an online marketplace which connects buyers with lenders.
Once you’ve submitted your application, you get a list of possible lenders based on your credit profile.
This is a great platform for people at multiple levels of creditworthiness.
This platform uses technology which can quickly and efficiently evaluate your loan request.
Like CashUSA, it also connects you with multiple possible lenders, giving you a better chance of securing favorable terms for your loan.
Loan Service USA
This company provides loans for almost everything from travel to car purchases to debt consolidation.
It takes less than two minutes to fill out an application. In some cases, the money may be available within 24 hours.
Loans With Bad Credit
If you have bad credit, it can be an obstacle to getting a good loan. However, there are some companies that specialize in providing loans to those with a less-than-spectacular credit profile.
BadCreditLoans allows you to submit a loan application free of charge.
According to their Responsible Lending Pledge, they make it their mission to protect borrowers from unfair lending practices.
Lending for Bad Credit (US)
With a quick and easy application process, you can usually secure a loan from Lending For Bad Credit by the next business day.
They have a large marketplace of lenders to choose from, increasing your chances of getting approved for a loan.
Funeral Loan Tips
If you’ve decided that securing a funeral loan is the right choice for you, it’s a good idea to compare different lenders. You will want to choose a reputable lender who can give you an interest rate and repayment terms you can afford.
It’s a good idea to use a personal loan calculator to figure out exactly what you can afford as a monthly payment.
Decide How Much You Need
The first step in securing a funeral loan is determining how much you will need to borrow.
This kind of pre-planning makes it easier later on, so no one will have to suddenly face the burden of unexpected funeral costs.
Cost of a Funeral
To figure out how much you need to borrow, you’ll have to do some research into how much the funeral will actually cost.
Funeral costs vary widely depending on where you live and what kind of services you want.
Average Cost of a Funeral
In general, you should plan on paying anywhere from $7000 to $10,000 in funeral expenses. These costs may be significantly less if you opt for cremation instead of burial, about $6000-$7000.
Breakdown of Costs By Service Type
For a cremation, along with a traditional funeral service, you can expect to pay between $10,000 and $12,000. If you choose a more basic memorial service (instead of a traditional funeral), your total cost will add up to between $8000 and $10,000.
The cost of burial, combined with a traditional funeral service, is about $15,000. With a simple memorial service instead, your total costs will be around $10,000.
Breakdown of Main Costs
You may wonder why cremation, burial and funeral services come with such a hefty price tag.
In fact, this is the result of many smaller items which add up to an intimidating grand total.
You can save money by deciding what you want or don’t want ahead of time and comparing prices for these items.
The funeral service
The funeral home will generally charge a basic fee to everyone who uses their services. This fee covers the cost of paperwork and storage of the remains. Most funeral homes charge between $2000-$2500 for this non-declinable fee.
On average, caskets cost between $2000-$5000. However, in some cases they may sell for over $10,000.
It’s smart to shop around for the best prices on caskets. Often, funeral homes will try to sell you their most expensive selections.
This cost may be unnecessary if you plan to bury or cremate the remains immediately after death.
Refrigeration can be a less costly alternative.
Embalming costs between $500-$700 on average. In some cases, it may cost as much as $1000.
The cost of cremation varies a lot depending on where you live and any additional services that are included.
It can cost anywhere from $1000 to $8000.
The average cost for burial is about $9000 or more. This cost includes items such as a headstone, grave liner, flowers and transportation. You may be able to save money by comparing prices for these items from different sellers.
The money for a burial plot goes directly to the cemetery (rather than the funeral home).
The cost averages between $1000 and $4000.
If you’re a veteran, look into burial in a V.A.-certified cemetery; this can save you a lot of money.
The quickest and most convenient way to secure a funeral loan is by submitting an online application.
In doing so, you can often connect with several different lenders by filling out just one application.
Have These Documents Ready
You will need:
Your Social Security number
The amount you want to borrow
Proof of income (tax returns, pay stubs)
Proof of address
Your driver’s license number
It’s also a good idea to check your credit score beforehand.
Alternatives To Funeral Loans
As you can tell, funeral loans are not for everyone.
You might want to look into these other ways of funding funeral expenses.
Payable On Death Account
You can set up a bank account, naming a beneficiary to receive the funds when you pass away.
This is a good way to ensure that funds can be accessed immediately without having to apply for a loan.
Life Insurance Policy
If the deceased person has life insurance or burial insurance, this will almost always cover some portion of the funeral costs. It should be the first avenue you explore when seeking funds for a funeral.
The V.A. will contribute up to $2000 to cover funeral expenses for veterans who died in a service-related death.
For those who died in non-service-related deaths, they will cover expenses up to $780.
Funeral Assistance Programs
There are some nonprofits and charity organizations that offer funeral assistance to those in need.
A few sources to look into are the Funeral Consumers’ Alliance and Final Farewell.