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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.
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.
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:
These aren’t all essential costs — it’s possible to have a funeral for as little as $1,000 with a very basic ceremony.
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.
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.
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.
Funeral loans come with short-term benefits, but some long-term drawbacks.
Eligibility requirements can vary depending on the lender. But generally, you need to meet the following criteria at a minimum.
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.
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.
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.
Consider these factors when looking for a loan to pay for the cost of a funeral.
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.
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.
Refinancing with another lender or even switching repayment plans can free up room in your budget and even save on the total cost.
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