Funeral loans, or personal loans to cover funeral expenses, are available for those who need them
Losing a loved one can be a difficult experience on a number of levels, including financially, with the average cost of a funeral, including a viewing and burial, currently exceeding $7,800. What can you do if you need to arrange a funeral but dont have the money available? You have several options, including taking out a personal loan. Here is what you need to know.
Planning a funeral is never easy especially when you are grieving. On top of the emotional stress you have to handle all the financial aspects of putting your loved one to rest. Unfortunately, funerals can be quite expensive, with the average cost ranging from $7,000 to $12,000. For many families, coming up with this amount of money on short notice is nearly impossible. This is where funeral loans can help.
A funeral loan allows you to pay the funeral home upfront while making more affordable monthly payments over time. The problem is most lenders check your credit score before approving a loan. So what happens if you have bad credit but desperately need funeral financing?
In this article, I’ll explain how funeral loans work, where to get one with bad credit, alternatives to loans, and tips for getting approved with less-than-perfect credit. As someone who has researched this extensively after recently losing a family member, I want to share everything I learned to help others navigating this difficult situation.
How Much Does the Average Funeral Cost?
According to the National Funeral Directors Association (NFDA), the median cost of a funeral with viewing and burial was $7,848 in 2021. The itemized breakdown is:
- Basic services fee: $2,300
- Transfer of remains: $350
- Embalming: $775
- Other body preparation: $275
- Facilities for viewing: $450
- Facilities for funeral service: $515
- Hearse: $350
- Service car/van: $150
- Metal casket: $2,500
- Vault: $1,572
- Printed materials: $183
Keep in mind this does not even include cemetery costs like the plot, headstone, and opening/closing fees. When you factor those in, it’s easy to see how funeral costs can creep over $10,000.
Ideally, you would have savings set aside for these expenses. But the reality is most families do not plan for this, and even fewer have cash readily available, especially when a death is unexpected.
Why Take Out a Funeral Loan?
A funeral loan allows you to pay the funeral home upfront while making more affordable monthly payments over 6 months, 1 year, or longer. Here are some of the key benefits of funeral financing:
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Pay the funeral home upfront – With a loan, you can cover all immediate expenses instead of paying in installments. This allows you to move forward quickly with services.
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Fixed monthly payments – Funeral loans have fixed payment schedules, so you know exactly what to budget each month.
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Better rates than credit cards – Personal loans tend to have lower interest rates compared to credit cards. And you may even qualify for 0% promotional financing.
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Improve your credit – Making on-time payments can help rebuild your credit score.
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Available with bad credit – Most lenders work with all credit levels, not just good credit.
As you can see, the flexibility and predictability of funeral loans make them an attractive option compared to alternatives like credit cards or payment plans.
Where to Get a Funeral Loan with Bad Credit
If you need to finance funeral costs but have less-than-perfect credit, here are some options to consider:
1. Online Lenders
Online lending companies like LendingUSA specialize in bad credit loans, including funeral financing. The benefit is they use more than just your credit score to assess your application. They also consider your income, existing debts, and repayment ability.
LendingUSA offers funeral loans up to $40,000 for borrowers with credit scores as low as 550. You can check your rate online in minutes without affecting your credit. If approved, funds can be disbursed as soon as the next business day.
2. Credit Unions
Credit unions are non-profit financial cooperatives that typically offer better rates and fees compared to traditional banks. Many have special loan programs for members going through hardship. I’d check local credit unions to see if they offer funeral loans or personal loans you can use for funeral expenses.
3. Peer-to-Peer Lending
With peer-to-peer lending sites like Upstart and LendingClub, you can borrow directly from individual investors instead of a bank. These platforms may approve those with poor credit, but you’ll likely pay higher interest rates.
4. Funeral Home Financing
Some (not all) funeral homes work with outside financing companies to offer on-site credit approval for funeral costs. This option is certainly convenient, but be sure to compare interest rates and fees to other lenders.
5. Life Insurance
If your loved one had any active life insurance policies, the death benefit payout may be enough to cover funeral costs. You can assign the funeral home as the beneficiary to expedite payment.
6. Government Aid
There are some government programs that provide funeral assistance if the deceased met certain eligibility criteria. For example, the Federal Emergency Management Agency (FEMA) offers up to $9,000 for COVID-19 related deaths. And the Department of Veterans Affairs (VA) covers certain burial costs for qualifying veterans.
While none of these options are necessarily easy or guaranteed, they do give you a better chance of getting approved for funeral financing with bad credit. It’s just a matter of finding the right lender or program for your situation.
7 Tips for Getting Approved for a Funeral Loan with Bad Credit
If you have poor credit, you may feel like you have no chance of getting approved for a funeral loan. But there are things you can do to boost your odds:
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Shop around – Apply with multiple lenders to increase your chances. Online lenders tend to be more flexible than banks.
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Bring a co-signer – Adding a co-signer with good credit can improve your approval odds and interest rate. Make sure they understand the obligation.
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Use collateral – Pledging collateral like a car title demonstrates you can repay the loan. Just know the risks if you default.
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Show steady income – Lenders want to see you have enough recurring income to make payments. Provide recent pay stubs.
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Explain past credit issues – Be ready to clarify late payments, collections, and other negative marks on your credit reports.
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Start small – Asking for a lower loan amount can make approval easier. You can potentially borrow more after making timely payments.
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Apply in person – With an online lender, the process is automated. Speaking with a loan officer face-to-face can increase empathy for your situation.
The better prepared you are, the higher your chances of getting a funeral loan approved despite poor credit.
Alternatives to Funeral Loans
Taking out debt may be your only viable option to cover funeral costs upfront. But if you want to avoid loans or don’t qualify, here are a few alternatives to consider:
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Payment plan – Ask if the funeral home offers reasonable payment installments over 6-12 months.
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Crowdfunding – Creating a GoFundMe campaign is a quick way to raise donations from friends and family.
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Sell assets – You may need to liquidate investments, valuables, or unused items around your home to come up with cash.
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Use credit cards – Putting funeral expenses on a credit card allows you to pay over time. Just watch interest rates.
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Life insurance – Check if your loved one had any small policies, even through work or membership groups.
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Cremation – Choosing cremation instead of burial can save thousands in funeral costs.
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Public assistance – Those with very limited income/assets may qualify for state/county burial benefits.
Ideally, you would use cash, insurance proceeds or other assets payable upon death to cover expenses. But few people plan ahead for funeral costs, hence the need for financing. Weigh your options carefully and get creative if you want to avoid funeral loans.
Common Questions about Funeral Loans with Bad Credit
If you are considering a funeral loan with bad credit, you probably still have some questions. Here I’ll try to answer some of the key ones:
Q: What credit score is needed for a funeral loan?
Most lenders prefer scores above 580-620, but some may approve applicants with scores in the 500s. Each lender sets their own requirements. With very low scores, expect much higher rates/fees or the need for a co-signer.
Q: How fast can I get funeral financing?
Online lenders like LendingUSA can approve applications in minutes and fund loans as soon as the next business day. That makes them a good option when you need money quickly to pay funeral costs.
Q: Where is the best place to get a funeral loan with bad credit?
I recommend starting with online lending companies as they are more accessible and flexible for borrowers with poor credit. LendingUSA, Upstart, LendingClub, and OneMain Financial are good options to try first.
**Q: Can I get
Pros and Cons of Personal Loans for Funeral Expenses
- Provides funding to pay for the funeral upfront
- Youll usually receive the money quickly, which is often necessary when planning a funeral
- Can reduce the stress of coming up with the money during an already stressful time
- Interest rates can be high if you have poor credit
- Loan terms can be short, possibly making repayment difficult
- If you are unable to keep up with the payments, youll do further damage to your credit
What Credit Score Do You Need for a Funeral Loan?
There is no universally required credit score for a funeral loan. Instead, lenders set their own criteria. Youre more likely to get better terms if you have a higher credit score. However, some lenders offer loans for those with bad credit.