Losing a loved one is hard enough without worrying about how you’ll pay for a funeral. If you don’t have enough savings to pay your loved one’s burial expenses out of pocket, funeral loans can help you cover the upfront costs while you pay them back over time. However, there is a lot to consider before you commit to financing a funeral.
Losing a loved one is painful enough without having to worry about how to pay for funeral expenses. Unfortunately, funerals can cost thousands of dollars, which many families do not have readily available. This is where funeral loans for bad credit can provide critical financial assistance.
In this guide, we’ll explain everything you need to know about securing funeral loans with poor credit. We’ll cover loan options, application requirements, costs, pros and cons, and tips for getting approved. Read on to learn how to give your loved one a respectful send-off, even with less-than-perfect credit.
Overview of Funeral Loans for Bad Credit
Funeral loans function similarly to personal loans but are specifically intended to cover end-of-life expenses Borrowers receive lump sum funds upfront then make fixed monthly payments over a set repayment term.
Loan amounts usually range from $2,000 to $20,000. Terms often span 2 to 7 years. With interest rates starting as low as 5%, funeral loans allow you to pay for services gradually rather than all at once.
Qualifying with bad credit is possible since funeral lenders emphasize income over scores. Pre-approvals take just minutes with minimal paperwork. Once approved, you’ll receive funds within a day or two.
Types of Funeral Loans for Bad Credit Borrowers
You have several options for financing funeral costs despite poor credit:
Online Installment Loans – Offered by online lenders like LendingUSA and Acorn Finance. Quick processing and funds delivery.
Credit Union Loans – Membership required Lower rates but smaller loan amounts
Bank Personal Loans – From local banks and community banks. More paperwork but competitive rates
Crowdfunded Loans – Friends and family contribute to your loan through a crowdfunding platform.
Installment loans from online lenders typically offer the fastest service, highest approval odds, and largest loan amounts for bad credit applicants.
What Credit Score is Needed?
Each lender sets their own credit requirements, but most consider scores as low as 500 or 600. The better your credit, the lower rate you’ll likely qualify for. Here are rough guidelines on credit tiers:
- Excellent: 750+ – Lowest rates offered
- Good: 700-749 – Slightly higher rates
- Fair: 650-699 – Decent rates still available
- Poor: 600-649 – Approval still likely but limited options
- Very Poor: 500-599 – High rates but can still qualify
Rather than your score alone, lenders also look at your income, existing debts, and loan purpose. Stable income can outweigh poor credit for many funeral loan providers.
5 Tips for Getting Approved for a Funeral Loan with Bad Credit
Follow these tips to boost your odds of successfully getting a funeral loan approved despite having bad credit:
1. Apply with an online installment loan provider – Online lenders like LendingUSA consider many factors beyond just credit scores. Large loan amounts and expedited funding gives families flexibility.
2. Provide proof of income – Pay stubs or bank statements confirming your regular income sources will be key. Funeral lenders want to see you can afford payments.
3. Bring a co-signer – Adding a co-signer with better credit can improve your chances and potentially secure you a lower interest rate. Make sure they fully understand the responsibility they are taking on.
4. Use collateral if possible – Some lenders may accept a vehicle title or other asset as loan collateral to offset risk. This opens up more possible lenders to choose from.
5. Explain the loan purpose – Specifically mentioning the loan is for funeral costs may persuade more hesitant lenders to approve your application. The solemn purpose can work in your favor.
The more evidence you provide confirming your ability to handle payments, the better. With persistence and preparation, you can find a lender willing to work with your situation.
What Do Funeral Loans for Bad Credit Cost?
Costs vary between lenders but expect to pay:
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Interest rates – Anywhere from 5% to 36% depending on credit. Online lenders on the lower end.
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Origination fees – Up to 8% of the loan amount. Some lenders don’t charge fees.
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Late fees – Around 5% to 10% of the monthly payment if behind on payments.
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Prepayment penalties – Online lenders don’t charge. Banks sometimes include on 3+ year loans.
Avoid very short repayment terms that create large monthly payments. Funeral expenses are already stressful enough. Give yourself adequate time to repay the loan comfortably.
Funeral Loan Amounts Available with Bad Credit
Loan amounts can range from $500 up to $50,000 with some lenders. Online installment loan lenders typically offer up to $15,000 to $25,000 even with poor credit. Banks are more conservative – often capping funeral loans around $5,000 to $10,000 for bad credit applicants.
Aim for the lowest amount you can affordably repay. There’s no sense borrowing more than absolutely necessary and paying excess interest costs.
Calculate total funeral expenses, subtract savings you can apply, then apply for a loan covering the remainder. An itemized funeral home quote is helpful for determining loan amount needed.
Pros of Funeral Loans for Bad Credit
Despite the high cost, funeral loans with bad credit provide important benefits like:
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Fast access to funds – Money in 1-2 days in many cases.
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Fixed monthly payments – Predictable and consistent unlike credit cards.
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No collateral required – Online loans don’t require assets to secure the debt.
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Direct payment to providers – Many lenders pay funeral homes directly.
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Consolidate multiple expenses – Combine various costs into one simple loan.
For difficult times, the speed, convenience, and flexibility of funeral loans makes them worthwhile if used responsibly.
Cons of Funeral Loans for Bad Credit to Consider
On the negative side, funeral loans can:
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Have very high APRs exceeding 36%
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Charge hefty fees raising the total repayment cost
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Risk repossession of collateral if attached
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Bury families deeper in debt if not affordable
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Carry prepayment penalties with some lenders
Ensure you compare all financing options. Borrow only what is absolutely essential. And build a repayment budget that avoids missed payments and default.
Alternatives to High-Interest Funeral Loans
If you want to avoid high-cost lending, a few other options to cover funeral costs include:
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Credit cards – Balance transfer cards offer 0% intro APR periods.
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401k/IRA withdrawals – If funds available, no early withdrawal penalties when used for funeral costs.
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Life insurance payouts – Either individual or group policies may help pay expenses.
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Crowdfunding – Create a GoFundMe page to request contributions from friends and family.
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Employer assistance – Some companies offer monetary assistance for funeral costs of immediate family.
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Payment plans – Make payments directly to the funeral home over time.
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Government aid – Potential assistance for very low-income households through Medicaid, Social Security death benefits, or veteran burial benefits.
The optimal route depends on your personal financial situation and available resources. Avoid high-cost loans unless absolutely necessary.
Step-by-Step Guide to Getting Approved
Follow these steps for getting a funeral loan with bad credit funded as quickly as possible:
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Determine needed loan amount – Add up all anticipated funeral, burial, and travel costs. Subtract any savings or insurance payouts you can apply.
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Gather required documents – Have ID, income verification, funeral home invoice, and any other required paperwork ready.
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Compare lender options – Research online installment lenders, local banks, credit unions, etc. Compare interest rates and fees.
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Complete online application – Apply directly on lender websites for fast processing. Provide all requested information.
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Get pre-qualified – Most lenders instantly check eligibility with a soft credit pull when you apply and give loan options.
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Evaluate pre-approval offer – Ensure you can afford monthly payments. Read terms closely. Ask questions.
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Provide verification docs – Supply paystubs, tax returns, funeral home paperwork as needed to underwriting.
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Accept loan terms – Review final terms, e-sign agreement, and accept cash disbursement preferences.
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Lender pays funeral home – Many lenders work directly with funeral homes and pay them on your behalf.
Following these steps helps expedite underwriting and approval so funds can be rushed to where they are needed most.
FAQs About Funeral Loans for Bad Credit
Get answers to some common questions regarding financing funeral costs with poor credit:
Can I get a loan to pay for a funeral?
Yes, many online lenders and some banks offer funeral-specific loans to cover end-of-life expenses for borrowers including those with bad credit.
How fast can I get funeral loan funds?
Online installment lenders provide funding as soon as the next business day in most cases. Just a few days from application to money in hand.
Where is the best place to get a funeral loan with bad credit?
Your best options are online installment loan companies that specialize in bad credit lending such as LendingUSA or Acorn Finance. Credit unions and small community banks can also provide funeral loans with poor credit.
Should I use a credit card instead?
Only if you can pay off the full balance within the 0% intro APR period, usually 12-15 months. Funeral loans often provide lower fixed monthly payments than minimum card payments.
What if I have no credit history?
Lenders may be willing to approve you based on income alone with manual underwriting. Rates will not be the lowest however. Bringing a creditworthy cosigner can help secure better rate offers.
Give Your Loved One the Service They Deserve
Losing someone close is painful enough without financial limitations holding you back from proper memorial services. With bad credit funeral loans, you can cover costs now and pay over time in manageable monthly installments.
Take time to grieve, lean on loved ones, and provide a meaningful goodbye. The funding will be there when you need it thanks to lenders offering funeral loans for those with less-than-perfect credit. With dignity and respect, you can focus on what matters most – honoring them.
Should you take out a loan to cover funeral costs?
Like any financial decision, taking out a loan for funeral expenses has its pros and cons. Here’s more information on what to consider as you weigh your options:
| Pros | Cons |
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Provides access to necessary funds: If you can’t afford to pay for funeral costs out of your savings or emergency fund, taking out a loan to cover the cost can help you access the money you need quickly. May help improve your credit score: If you can keep up with your monthly payments, paying back an installment loan can actually help you improve your credit score over time. Can reduce stress: Planning a funeral is stressful in its own right, but applying for a loan can help you stop worrying about where the money is coming from. |
Creates more debt: Taking on more debt can have potentially negative consequences if you’re unable to keep up with your payments, including causing your credit score to drop. May involve paying high interest rates: While bad credit loans do exist, you may be subject to higher interest rates if you have a lower score. Encourages sole responsibility: Unless you apply with a co-borrower, taking out a personal loan leaves you solely responsible for paying it back. If your circle is large enough, it may be worth looking into alternative options, like crowdfunding, where you can share the cost burden. |
What are the costs associated with financing funeral expenses?
Before you decide whether applying for a personal loan to cover funeral expenses makes sense, it’s a good idea to break down how much this financing method can cost you. With that in mind, here’s a look at some of the most common personal loan fees you’ll find.
- Origination fees: Origination fees are charges imposed by the lender to cover the administrative costs of generating a new loan. These fees are typically expressed as a percentage of the loan amount and can range from 0% to 12%. However, they can also typically be rolled into the loan amount, allowing you to pay for them over time.
- Interest charges: Interest is included in your monthly payments as a fee the lender extends in exchange for borrowing money. The interest rate you’re given will depend on your credit score. However, as of the time of writing, the average 24-month personal loan interest rate is 12.35%, according to the Federal Reserve.
- Prepayment penalties: Not many lenders charge prepayment penalties anymore, but this is a fee for paying off the loan early. But, when it happens, it’s typically either expressed as a flat charge or as a percentage of the remaining loan balance.
- Late fees: Some lenders charge late fees on payments received after their agreed-upon due date. Be sure to research lenders to learn their individual policies. For instance, SoFi does not charge late fees while Discover charges a $39 fee for each occurrence of late payment.