What are funeral loans?
Funeral loans are personal loans acquired to pay for a funeral with cremation or burial. Personal loans can be obtained from the funeral home, a bank, credit union, or through online lending resources.
These personal loans can provide the funds you need for costs you can expect, including casket, funeral home services, and burial. You can also use these personal loans for additional expenses like travel and hotel for yourself or loved ones.
Who is responsible for paying funeral expenses?
When someone dies, the responsibility for paying for the funeral, cremation or burial expenses falls to the executor of the deceased person’s estate as outlined in their will, or next of kin if there is no will. Funeral expenses are prioritized and generally get paid before all other debts.
What happens when a family can’t afford a funeral?
The passing of a loved one can bring difficult times as one deals with both the emotions of grief and loss and the business of a funeral. What happens when someone dies who did not have a will, or does not have any money in their estate to cover the costs of a funeral, cremation or burial?
According to federal law, If the estate of the deceased or the relatives lacks the funds needed to pay for the funeral expenses, the person handling the death can sign a release at the coroner's office. This declares their inability to afford to bury or cremate the deceased family member. Once signed, the body is released for the coroner to handle, but it also means there will be no funeral.
Rather than forfeiting your right to memorialize and celebrate your loved one with a funeral, you might want to consider looking into funeral financing options.
Can you finance a funeral?
Borrowing money for funeral expenses is not generally considered a good idea. However, funerals can be financed. As you begin researching your financing options, be sure to check with the funeral home you are considering to see what they offer. Several specialized lending companies provide funeral financing directly through the funeral home, and they may be one of your best options. Funding through your funeral home allows you to easily apply while you are at the funeral home, taking care of other arrangements. That’s one less thing to do.
Applying for a personal loan for funeral financing using an online lending engine allows you to apply one time and receive multiple competing offers for you to compare.
How much should you borrow for a funeral?
The amount of money you borrow for a funeral should cover the total known funeral expenses (handling of remains, casket, cremation/burial, flowers, and printing). It would be best if you also request a small amount beyond what you think you need for any unforeseen costs. Keep in mind there may be travel, hotel, and catering expenses for you or other loved ones you may want to add into the total amount requested.
Best Funeral Loan Options
When shopping for funeral loans, there are several things you will want to compare:
- Do they offer competitive interest rates?
- Are there any additional fees?
- Do the loan terms fit your needs?
- Do you meet their eligibility requirements?
- Do they offer convenient account management?
- Do they offer a short application process and quick funding?
Let's compare some of the options you’ll find for personal loan lenders.
LightStream
» MORE: LightStream Personal Loans Review
Avant
Avant - Offers up to $35,0000.00 in personal loan financing primarily for debt consolidation AND emergencies, making it an excellent resource for anyone looking for funeral financing, especially if the borrower has a lower credit score.
Pros
- You can apply online, or over the phone, applying does not affect your credit score
- No minimum credit score or income requirements to apply
- Rates you qualify for are displayed right on your computer during the application process
- The online form lets you know if you are pre-approved and gives you some options
- Avant connects with your bank directly to get most of the information they need for approval - minimizing paperwork you’ll need to apply
- 24/7 customer support via phone
- The Avant platform charges 4.75% in origination fees, but there are no additional fees if you pay off your loan early
- Mobile and online account management
Cons
- Because Avant finances higher risk personal loans for people with poor to average credit, the finance rates are higher than for people with better credit.
- Lacks online calculator - handy for figuring out your payments and how much interest you’ll pay for the life of the loan
Upgrade
Upgrade - This is another great lending resource to consider if a credit score is less than perfect and the borrower needs the money quickly.
Pros
- Apply and receive funding in as little as 4 days
- Competitive interest rates
- Lower credit scores okay, 620 minimum
- Can borrow up to $50,000.00
- Free credit monitoring with a summary credit report from TransUnion you can use to improve your score
Cons
- Upgrade charges a loan origination fee - ranging from 1.50% to 6.00% of your loan amount, remember to factor this into your budget.
- Personal loans through the Upgrade platform are not available in all states
- Upgrade loans are short term loans and may not be the right fit if you need more time to repay your debt
SoFi
SoFi - The borrower best suited for funding a funeral with a personal loan through SoFi has good to excellent credit, and income history.
Pros
- NO Origination Fee
- Longer loan term options, 24 - 84 months
- Borrow up to $100,000.00
- Competitive low interest rate range - you can choose variable or fixed APR
- Pre-qualify without a hard inquiry on your credit history
- No collateral necessary
- Forbearance for up to 12 months with career counseling if you lose your job
Cons
- Must have good credit history and income
- Funding can take time - the application process takes just a few minutes, but SoFi can take up to a week to fund the loan due to their underwriting process
When reviewing the terms and conditions of your funeral loan, pay attention to grace periods in case of late payments. It's important to understand your options in case of financial hardship.
Do funeral homes give loans?
As mentioned earlier on, another financing option you can consider is a funeral loan or personal loan you can apply for directly through the funeral home. These personal loans also provide:
- Easy application with same-day or next-day approval.
- Competitive, fixed interest rates and fixed monthly payments you can afford
- Short repayment terms, anywhere from 1-5 years
- They are unsecured loans - meaning no need for collateral or equity to obtain
- The repayment terms (finance rate, monthly payment, and repayment period) are based on your personal credit history and eligibility criteria.
Alternatives to funeral loans
Financing a funeral is a big decision for anyone going through a difficult time. Personal loans may not be an option for you if your credit and income history are less than stellar, or you cannot commit to making monthly payments, so what are the alternatives?
Consider asking family members to split the costs of the funeral. You can also have an in-home or church service to cut facility and staffing costs. Be sure you understand and can afford the costs of a funeral home handling the body for transport, burial or cremation.
Conclusion
You can arrange the funeral you envisioned for your deceased loved one. If you have funds available through their estate, use them, that’s what they were set aside for. However, if the person you cared for was not able to plan ahead or provide the funds for handling their end-of-life funeral requests, there is personal financing available through funeral homes, banks, credit unions and online lenders.
