Losing a loved one isn’t easy. Not being prepared to pay for a funeral can add to that burden. The average cost of a funeral is $8,000 to $10,000, according to Parting, a funeral home comparison website. This includes costs associated with the funeral home, the ceremony, and the grave marker.
If you want to get a head start on financially preparing for a funeral or you need to cover its costs now, you might consider funeral loans. Here’s what they are and how to decide if you need one.
What are funeral loans?
A funeral loan is a personal loan. You can take out personal loans for a slew of purposes, from paying off high-interest credit card debt to staying up to date on bills. Funeral loans can cover costs such as burial or cremation, day-of services, and headstones.
You can get a funeral loan from a bank, a credit union, or an online lender. Regardless of which you choose, it’s important that you get a personal loan from a reputable institution.
In an urgent and stressful situation, such as losing a loved one, a payday loan might seem like an easy option. However, payday loans have high interest rates and difficult repayment terms.
If you compare personal loan lenders, you’ll find better interest rates and repayment terms.
Personal loans are typically unsecured loans, which means you don’t need to put up collateral — such as a car or house — to get a loan. Your interest rate and terms are based on your credit score, your income, and how much you can start to pay back as soon as possible.
Pros of funeral loans
Having access to a personal loan you can use in case of an emergency is important, especially when it comes to paying for a funeral. There are a few benefits of funeral loans you should know about.
- Fast payout. With an online lender, you’ll get your money quickly — usually in one to three days.
- Repay on good terms. You can set your repayment terms based on your financial situation. If you’re looking for low monthly payments, many lenders will work with your budget.
- Good credit = low interest rate. The higher your credit score is, the lower your interest rate will be.
- Keep your savings. If you’re trying to avoid tapping into your retirement account to pay for a funeral, a loan can keep you on track.
You shouldn’t have to choose between a funeral and your other expenses. Funeral loans can be a great way to help pay for costs if you’re short on cash.
Cons of funeral loans
Even though funeral loans can be helpful, they aren’t for everyone.
- Bad credit = high interest. While it’s possible to get a personal loan with bad credit, a low credit score won’t help your chances. And a high interest rate makes it harder to make your payments on time in full.
- Unnecessary money. If you aren’t sure how much a funeral is going to cost, you might take out more money than you need. That means you’ll have to pay back more money later.
One way to avoid overspending for funeral services is to know federal funeral laws.
“Most funeral homes price everything as a package, with the only variable price being the casket,” said James Philpot, an associate professor and the director of the financial planning program at Missouri State University. “Federal law requires them to break out the costs into an itemized list (and they do) and to allow a la carte pricing.”
Be cautious when you look into funeral loans. If you don’t have a steady income to pay back your loan on time and make at least the minimum payment each month, a funeral loan might not be right for you.
How to get funeral loans
If you decide a personal loan is your best option, there are a few steps to take next. Figuring out how much a funeral is going to cost makes it easier to determine how much you should borrow.
Here are some average funeral costs, according to Parting:
- Funeral director’s services: $1,500
- Casket: $2,300
- Embalming: $500
- Using the funeral home for the funeral service: $500
- Gravesite: $1,000
- Cost to dig the grave: $600
- Grave liner or outer burial container: $1,000
- Headstone: $1,500
Before you take out a loan, it might help to use our personal loan calculator to determine how much your monthly payments would be. From there, you can visit a bank, credit union, or online lender to apply for a loan.
Make sure you’re prepared with all the necessary documents, including:
- Proof of address
- Social Security number
- Proof of income
- Driver’s license number
- The amount you’d like to borrow
You also might want to check your credit score before you apply so you can get a sense of the interest rate and terms you might qualify for.
Alternatives to funeral loans
If you’re having trouble getting a loan for a funeral, whether it’s because of a low credit score or an unsteady income, there are other options.
You might be able to use your savings or Social Security benefits (Social Security pays a death benefit to the surviving spouse) to pay for a funeral.
You also could use a credit card. Although credit cards tend to have higher interest rates than personal loans, using a credit card might be a good option if you don’t have great credit.
It’s especially important to avoid overspending with a credit card. Budget out exactly what you need and review the costs of caskets, services, and other fees so you know how much you’ll need to put on your credit card.
Funeral loans can be helpful
If you find yourself short on funds for a funeral, funeral loans can help. Whether you’re planning for a loved one or making your own arrangements, funeral loans can help you pay for the costs.
Interested in a personal loan?Here are the top personal loan lenders of 2018!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105.
†Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at reviews.lendingclub.com
**Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between January 1, 2018 to July 20,2018. The time it will take to fund your loan may vary.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000|
|6.26% – 14.87%1||$5,000 - $100,000|
|6.99% – 35.97%*||$1,000 - $50,000|
|5.99% – 24.99%2||$5,000 - $35,000|
|4.99% – 29.99%3||$10,000 - $35,000|
|5.99% – 18.99%4||$5,000 - $50,000|
|15.49% – 34.49%5||$2,000 - $25,000|
|6.95% – 35.89%6||$1,000 - $40,000|
|6.99% – 18.24%7||$5,000 - $75,000|
|9.95% – 35.99%8||$2,000 - $35,000|