A funeral loan is a personal loan you use to cover the costs associated with a funeral for a loved one. They can be useful if you can’t pay for everything up front. But they can be expensive — especially if you need money fast, have bad credit or go with the option at your funeral home without comparing other lenders.
Where can I get a funeral loan?
You can get a loan to pay for a funeral at a bank, credit union or online lender. Some funeral homes also offer financing themselves — though it’s usually through a partner lender and doesn’t always come with the best rates.
Online lenders can get you funds within a few days and tend to have more flexible eligibility requirements. But they often come with higher rates than your typical bank or credit union.
How much does a funeral cost?
That depends on the type of funeral. A funeral with a burial costs an average of $9,135, according to a 2019 National Funeral Directors Association (NFDA) study. A funeral with cremation costs $6,645 on average, according to the same study.
This can include the following costs:
- Basic services fee: $2,195
- Remains transportation fee: $350
- Embalming: $750
- Additional body preparation: $255
- Viewing: $425
- Funeral ceremony: $500
- Hearse: $340
- Service car or van: $150
- Printed memorial package: $175
- Metal casket: $2,500
- Cremation casket: $1,200
- Cremation fee: $350
- Rental casket: $995
- Wooden casket: $3,000
- Burial vault: $1,495
- Urn: $295
- Alternative cremation container: $150
These aren’t all essential costs — it’s possible to have a funeral for as little as $1,000 with a very basic ceremony.
How do funeral loans work?
A funeral loan works by breaking up the cost of the funeral into installments so you don’t have to pay it all at once. Generally, you’ll take out the loan with a private lender and use the money to pay the funeral home. Then you’ll repay the loan each month in installments — plus interest and fees.
How much does a funeral loan cost?
That depends on how much you borrow, your rate and loan term. Interest rates on personal loans typically run from around 4% to 36% APR with terms from two to five years. The APR might include an origination fee, which lenders charge after you sign the contract and can run up to 5%.
Generally, you need near-perfect credit, few other debts and high income to qualify for the lowest rate. If you have bad credit, you might struggle to qualify at all. To get a lower rate, you might want to back your loan with collateral.
Use the calculator below to see how much a funeral loan would cost each month and in total based on amounts, rates and terms.
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How has the coronavirus affected funerals?
You might not be able to hold a funeral as soon as you like or with as many guests during the coronavirus outbreak. Funeral homes are unfortunately busier than usual, and many are limiting in-person viewings to 10 family members. Religious leaders might also not be able to attend in person.
Some experts are suggesting that mourners hold an intimate ceremony now and save the large memorial for after social-distancing guidelines have lifted. This can also help you reduce the amount you need to borrow by giving you time to save up.
Pros and cons of borrowing to pay for a funeral
Funeral loans come with short-term benefits, but some long-term drawbacks.
- Low upfront cost for funeral and service
- Avoid dipping into your savings
- Collateral not necessarily required
- Less limited on the type of funeral you can provide
- Increases total cost of the funeral
- Increases your monthly expenses
- High rates if you have bad credit or low income
- Not available to nonresidents
Can I qualify for a funeral loan?
Eligibility requirements can vary depending on the lender. But generally, you need to meet the following criteria at a minimum.
- Good credit. While you can qualify for a loan with bad or no credit, having a credit score of 670 or higher opens you up to more options.
- Steady income. Many lenders require you to have a full-time job, though you can also qualify if you receive government benefits like Social Security or disability.
- Low debts. Your monthly debt payments should be no more than around 40% of your monthly income before taxes — though the lower the better.
- US citizen or permanent resident. It’s still possible to get a loan as a nonresident alien, but your options are limited and it can get expensive.
- Over 18 years old. You must be the age of majority in your state, which is at least 18 years old.
If you don’t meet these criteria, you might want to consider asking another relative to apply as a joint applicant or cosigner — or take out the loan in their name.
How do I get a funeral loan?
You can follow these steps to apply for a loan to pay for a funeral — but keep in mind that you aren’t guaranteed to get approved.
- Calculate the costs. Reach out to the funeral home you plan on using and get an estimate of how much it’ll cost for the service you want.
- Shop around. Compare lenders that you can qualify for, based on the factors that are a priority to you, like cost and turnaround time.
- Prequalify. Many lenders allow you to see what rates and terms you might qualify for by providing basic information — and your bank or funeral home might be able to give you an estimate if you give them a call. Use this to narrow down your options.
- Apply. Pick a lender and follow the instructions to submit any required documents and additional information. If approved, read through the contract carefully before signing.
The entire process typically takes at least 24 hours and can take as long as a few weeks, depending on the lender you go with.
How to compare funeral loans
Consider these factors when looking for a loan to pay for the cost of a funeral.
- Turnaround time. How long will it take for you to receive your funds? Borrowing from an online lender or your bank are often the fastest options.
- APR. Your APR tells you the total annual cost of your loan, including interest and fees.
- Fees. Read the loan terms and conditions to see if there are any application fees, origination fees or ongoing charges that apply — as well as the penalty charged if you miss a repayment.
- Term. A longer loan term lowers your monthly cost — but will make your loan more expensive in the long run.
- Security. If you’re applying with an online lender, make sure the lender takes steps to protect sensitive information you enter online, like SSL encryption.
- Customer reviews. While customer reviews should be taken with a grain of salt, you might want to rethink working with a lender that has a high volume of complaints.
Prepaid funeral plans
Many funeral homes offer prepaid funeral plans, which allow you or a loved one to pay for the costs of a funeral ahead of time in installments. This can offset the immediate cost to your family, allow them more time to grieve and ensure that you get the type of burial you prefer.
5 more ways to pay for a funeral
You might not necessarily have to borrow to pay for a relative’s funeral, even if they didn’t have life insurance or save up for the cost. Consider these alternatives before you borrow.
- Social Security survivor’s benefit. Surviving spouses can receive a survivor’s benefit, which you can use to pay for the funeral. You can apply by calling 800-772-1213.
- Credit cards. Personal loans rarely run under $1,000. If you need to finance lower costs, using a credit card might make more sense — especially if you can qualify for a 0% intro period.
- Crowdfunding. You can use a site to set up a crowdfunding campaign — or ask your loved one’s friends and family share the cost.
- FEMA funeral assistance. The Federal Emergency Management Agency (FEMA) might be able to cover some or all of the costs of a funeral during a natural disaster. This doesn’t include the coronavirus outbreak as of April 29, 2020 — though that might change in the near future.
- Funeral home payment plans. Funeral homes might be willing to offer an interest-free installment plan or reduce the cost if your family can’t afford it up front.
Frequently asked questions about funeral loans
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