You may be faced with unexpected funeral costs after the death of a close friend or family member. Funerals can run into the thousands depending on where and what services are provided.
You may be able to borrow money to pay for the funeral costs if you don’t have enough funds to honor your loved one’s wishes. Let’s look at funeral loans and how they can be used to help families ease financial hardship during times of need.
What is a Funeral Loan?
A funeral loan is a personal loan used to pay for funeral expenses. This type of unsecured loan can be used for any major expense, investment, or even a funeral. It can cover everything from the viewing and the memorial costs to the service fee.
Rates and terms for personal loans are determined by creditworthiness. This means that applicants with better credit ratings will likely receive lower interest rates. After you have been approved for a personal funeral loan, the lump sum payment will be sent to you within a few days. This is particularly helpful for those who need to quickly plan a funeral reception or wake.
What is the cost of funeral expenses?
It is important to know how much the funeral or memorial will cost before you make a decision about how to pay. Prices will vary depending on where you live, the services offered, and the funeral home.
These are the most frequent costs when planning a funeral, according to the National Funeral Directors Association.
- Metal burial casket: $2,500
- Funeral service fee: $2,195
- Vault: $1,495
- Embalming: $750
- Facility and staff use for funerals: $500
- Viewing facilities and staff: $425
- Transportation: $350
- Hearse: $340
- Cosmetic preparations: $255
- Print materials: $175
- $150 for service car or van
Also Read: How to Get Funeral Home Loans?
Funeral loans: The pros and cons
Let’s now learn what a funeral loan actually is. When deciding whether to borrow money for funeral expenses, be sure to consider your financial situation.
Pros of Funeral Loans
- Quick funding: You don’t want to worry if the loan funding is approved on time if the funeral date is fast approaching. Qualified borrowers will be able to receive their loan amount within a few days after being approved. Rocket Loans(r), in fact, offers same-day funding for borrowers who require their money quickly.
- Installment payments: Personal loans are installment loans. You will repay the loan in equal monthly payments over the term. This allows you to make monthly payments and not have to finance the funeral upfront.
- Financial burdens are less: It can be difficult to cope with the loss of a loved one. A personal loan is a great option if you are having financial difficulties paying for a funeral. This will allow you to concentrate on the celebrations of the life of your loved ones instead.
Cons of Funeral Loans
- Additional financial stress: If you are struggling to pay funeral costs, it may not be a good idea to add more debt. While fulfilling the wishes of a loved one is a very important responsibility, it is also important to think about how borrowing a personal loan might affect your long-term and monthly finances.
- Costs are a personal liability: Personal loans are only, personal. Instead of splitting funeral costs among family members and friends, you will be responsible for all funeral expenses.
- To qualify, you must have a high credit score: To qualify for favorable loan terms and attractive interest rates, you will need to have a good score of at least 650. Otherwise, you could be subject to a high-interest rate which may not make the loan financially feasible.
Alternative Methods Of Funeral Financing
These alternative financing options are available if you are unsure whether you should proceed with a funeral loan.
In-House Funeral Financing
You may be eligible for in-house financing depending on which funeral home you choose to use to pay for the funeral and memorial services. You can opt into the payment program at your funeral home and repay them directly, instead of borrowing money from a bank, credit union, or online lender.
Funeral homes offering financing packages usually require that the service be repaid within 6-12 months. However, the repayment period is determined by company policy. Talk to the funeral director if you are interested in the funeral home’s payment program. They will discuss interest rates as well as repayment plans.
Zero-Interest Credit Cards
You have the option of using a zero-interest credit line to pay for funeral expenses, depending on your credit history. You can use a credit card that has a 0% interest rate to pay for funeral expenses.
This option is affordable for those who don’t wish to borrow money but want to spread the funeral costs. Keep in mind, however, that interest will be charged on any balance after the promotional period ends.
How to Get a Funeral Loan
These are the steps you need to follow before you sign the contract. Here are the steps to obtain a personal loan to pay for a funeral.
- Secure your credit: You want to have the best credit history and credit score possible, no matter how personal loans are used. Check your credit report and make any corrections immediately.
- Ask for quotes from other lenders: It is a good idea to take the time and compare quotes from different lenders. Although this can seem daunting if you are trying to plan a funeral quickly, it will ensure you get the best interest rates and terms possible.
- Apply for prequalification: Apply for prequalification once you have narrowed down your options. This will allow you to see the terms each lender offers. Prequalification does not usually affect your credit score.
Also Read: 5 Top Things You Must Know About Your Home Loan EMI
You’re not the only one struggling to pay for a funeral that will be held to honor your loved ones. It can be hard to pay unexpected funeral costs, as the cost of funerals and memorial services has risen dramatically over the past decade. It is important to consider all options for funeral financing: personal loans, funeral home financing, zero-interest credit cards, and funeral home financing.
Clients who complete the loan process and sign the Promissory note by 1:00 pm ET on a working day can get same-day funding. The ACH credit will be sent to your bank within one business day. Although this may lead to same-day funding, results can vary and your bank may have restrictions that may limit our ability to credit your account. We cannot be held responsible for any delays caused by incorrect routing numbers, account numbers, or other errors at your financial institution.