How to Get a Funeral Loan
Funerals are expensive and often cost much more than the average American family can afford. With a typical price tag of $9,000 and a time-sensitive nature, families in need are often left with little options when it comes to financing a funeral. A funeral loan is one option families can turn to in an emergency -- but is it worth it? Loans for funerals can be a great option for many, but it's important to know all your options and weigh the pros and cons before signing on any dotted lines.
How much do funerals typically cost?
The first thing to know is how much you can expect to pay for a funeral. Knowing this number will help you anticipate the amount of money you’ll need to raise or potentially take out a loan for. The cost of a funeral can typically range from $7,000 - $12,000 depending on factors such as location, method of disposition & funeral home services offered. In addition to costs associated with funeral arrangements, there may be additional expenses that will need to be paid in advance. These include cemetery plot or urn purchase fees, flowers/florist costs, obituary publishing charges (if using a newspaper), pallbearers' honorariums if desired by the family & other items not directly related to funeral services rendered by the funeral director.
If you are like most families who don't have immediate access to thousands of dollars (especially if a death is unexpected), then you'll likely need to seek outside assistance to cover funeral costs.
Do funeral homes have payment plans?
The vast majority of funeral homes do not offer payment plans and expect to be paid in advance. Funeral homes are often one of the last places people turn to for financial assistance and help with financing the funeral since they very rarely offer funeral payment plans.
Although funeral homes and funeral directors do offer payment plans in rare cases, funeral directors will not typically extend this type of courtesy to everyone. Most funeral homes require an upfront deposit or down-payment before any work can be done on behalf of the deceased.
Can I get a funeral loan with bad credit?
The answer is "yes" -- it is possible to get a funeral loan with bad credit, but the interest rates will be higher than if you have good credit. If you are considering getting a funeral home loan for yourself or someone else in your family, the first step should always be asking an advisor at your local financial institution about what options they offer or suggest.
You should be wary of companies that try to sell funeral home loans, as it’s a business where the interest rates are typically high. Additionally, some companies are hoping you’ll make a bad decision during your time of grief and will offer you outrageous interest rates and fees. In order to reduce the risk of defaulting on your loan, you should plan ahead and shop around for what best fits your budget.
What are the disadvantages to getting a funeral loan?
Some of the disadvantages to getting a funeral loan include the following:
- Funeral loans are expensive.
- Funeral loans can be easy to get approved for, but harder to pay back as they typically have a high APR rate and interest rate that start on day one of taking out the loan.
- Finding reputable funeral home financing can be difficult and the industry is not well regulated.
- Funeral loans typically have a very short repayment term, and offer little flexibility in terms of changing your mind.
- Since many families are grieving after experiencing a loss, funeral loans can be a difficult financial decision for some to make and can be something families find themselves regretting yet not being able to change.
Alternatives to funeral loans
Look for government assistance at the county, city, and state level. Many counties offer untapped funeral financing assistance for residents of their county. These programs can be useful if you’re in need of emergency funeral funds. Find out if your county, city, or state offers any type of funeral financial assistance by reading this article.
Start an online fundraiser or a funeral crowdfunding campaign. Friends and family are typically looking for ways they can help the family following a loss. Setting up a memorial fundraiser is a great way to raise funds to cover unexpected funeral costs. People who want to pay their respects can donate directly to your family's funeral fundraiser online, which is less of a burden on them than asking friends and relatives for cash gifts. Make sure that you share the link on all of your social media channels so that it can reach as many people as possible, who want to make donations for funeral expenses.
Connect with Veterans Affairs. If the deceased was a veteran, they are entitled to certain benefits provided by the VA. Veterans Affairs will provide the family of the deceased with funeral and burial financial assistance depending on their service status and whether the death was service-related or not. Veterans who were discharged from service under conditions other than dishonorable can qualify for this benefit as well.
To apply for VA Benefits:
- Apply online.
- Find & work with a representative in person.
- Turn in your application at a local regional benefit office.
- Mail a completed application to your VA pension management center.
Collect the Social Security Death Benefit. The Social Security Death Benefit is available to surviving spouses and children of deceased workers who paid into Social Security. Family members can collect the full amount in one lump sum or receive monthly payments for up to twelve months after they file an application with SSA. This can only be done over the phone by calling 1-800-772-1213.
Ways to save money on a funeral
You can reduce the amount of money you’ll need to take out a loan for by reducing the cost of the funeral. Here are some ways you can easily save money on a funeral without sacrificing the quality of the funeral itself.
Consider cremation instead of a burial
You can save money by choosing to cremate your loved one rather than burying them in a traditional funeral. A cremation typically costs half as much as a burial and you can spend the money saved on other expenses, such as transportation to and from the funeral home.
Consider purchasing funeral products online.
A headstone, funeral urns and caskets are all available for purchase online. You can compare prices on the internet by searching through different websites that offer products in your price range. Ever Loved offers many funeral products for reduced prices in the online marketplace, which you can view here.
Hold the memorial service in a different venue
Holding and planning the memorial services on your own will let you avoid the facilities fee and staffing fee that's typically charged by a funeral home.Consider having friends and family members come over to pay their respects in the comfort of your own home. Alternatively, you can rent a venue such as a church or community center, or you can hold the memorial at another location that is meaningful to your loved one. Holding and planning the memorial services will let you avoid the facilities fee and staffing fee that's typically charged by a funeral home.
While this may seem like a lot of work and responsibility on top of all your grief, it will save you a lot of money in the long run if done correctly. Planning a memorial service also gives you the opportunity to plan the service you want for your loved one, and not just what everyone else wants. Additionally, many churches or community centers offer this type of planning and are available to you as a resource.
Do your research first
Researching before you go with a funeral home can save you thousands of dollars in the long run. Because there are so many different funeral homes around, it is important to make sure that you find one that suits your needs but also offers everything at an affordable cost. You don't want to end up being overcharged for something that could've been better priced if you’d just been aware of the price before the fact.
Another benefit of researching before you go is avoiding feeling pressured by the funeral home to purchase something you're uninterested in. Knowing what you want to purchase and the average cost before purchasing is important because you can avoid feeling like you're being forced into something or are being overcharged for something. It’s also important to remember that you are not required to purchase a full funeral home package, only purchase the services and items you want.
Get comfortable saying no
If a funeral home is pressuring you to buy, it's probably because they don't have the product that will suit your needs or budget. If this happens, politely decline and find somebody who does offer what you need at an affordable cost. You should never feel pressured into purchasing anything. Additionally, remember that a funeral home is required by law to use products purchased elsewhere, meaning you do not need to purchase a casket directly from the funeral home, you can purchase it online for much, much cheaper.
Steps to get a funeral loan
If you’re still interested in signing up for a funeral loan, there are a few steps you should take before signing on the dotted line.
- Decide if funeral financing is the best option for your family. Even if a loan is easy to take out, it may not be the best option for your financial situation. If you decide to go with a funeral loan, make sure that you know what fees and interest rates apply before signing any papers or agreeing to anything in order to get it approved quickly. Ask about all costs involved so there are no surprises later on down the line.
- If you decide that a funeral loan would be better than other options, talk to more than one lender and compare rates and repayment terms. It's important to compare loans from different lenders because the lowest interest rate doesn't always mean that it's the best loan for you.
- Decide what type of funeral loan fits your needs and financial situation. It's not necessary to take out the largest loan possible, even if you might be tempted to do so. It is important to make sure you can afford the payments, first and foremost.
- Get written documentation on all offers of credit before you sign anything. Getting written documentation will ensure you have proof of your loan terms.
- Review any contracts carefully, and if possible, get a professional opinion on the contracts to ensure they're reasonable.
- Choose your loan and identify a repayment plan that works for you. Setting up a memorial website is a good idea, even if you decide to take out a funeral loan. Memorial websites on Ever Loved come with tons of features, including the ability to set up events, collect memories, raise funeral funds, and much, much more.