What if the most terrible event in your life got even worse?
The death of a loved one is a shocking event in anyone’s life. And planning funeral arrangements adds stress, especially when it comes to money.
Many people have trouble paying for a funeral and don’t know how to get the funds they need. Fortunately, loans can help you take care of everything quickly and concentrate on the healing process.
Here is our guide to everything you need to know about paying for funerals with loans.
Is There Such a Thing As a Funeral Loan?
There are many types of specialty loans available. For example, you can get business loans to start a new venture or a mortgage for a new home. So, the obvious question right now is whether there is such a thing as a funeral loan.
The answer to this question is “yes and no.” While there are no specialty loans designed only for funerals, there are personal loans (also known as installment loans) that you can use for such a purpose.
Personal loans are just that: personal. You can use them for almost any purpose, whether that is financing a major purchase or even paying off high-interest credit cards.
With a personal loan, you can negotiate the exact rate and repayment terms. This may take additional time, but you typically end up with better terms than you can get with a payday loan (more on that below).
If it’s been a while since you applied for a loan, you may have mental images of waiting a long time to find out if you are approved. Now, you can usually get a response right away, whether the lender is local or online.
This is good because the quicker you get approved, the quicker you can get paid. Depending on the funeral timeline, you may be running short on time.
In fact, the bulk of your “wait time” for a personal loan is not actually waiting time. Instead, it is time you are spending (or should be spending) researching things like the costs and other expenses of a funeral.
Some of you may be reading this and wondering why you would need a funeral loan. After all, just how expensive could a funeral be?
Prepare yourself for some sticker shock: you’re likely to pay at least $8,000 for a funeral. And the cost could easily be as high as $10,000 or more.
You may wonder how the cost gets to be that high. In short, everything that a funeral home does with the body has its own cost. There are typically separate charges for transporting a body, preparing a body, and even using the facility to display the body for services.
All of these costs are typically bundled together, so it’s important you have enough money to cover everything.
Pre-Planned vs. Unexpected Expense
When is the best time to start planning someone’s funeral? It may sound morbid, but the real answer is “well before they pass.”
If you plan far enough in advance, you may not even need a loan for funeral expenses. You may be able to pay the funeral home or other third parties in advance over a period of time.
And if you are planning for a funeral ahead of time and still need a loan, you can take your time and shop around for the best interest rates and loans. In this way, you can treat a funeral like any other major expense requiring a loan.
However, if you have little to no time to prepare, you may need a payday loan.
Payday Loans: An Alternative
What is a payday loan? In many ways, the name says it all: this is a short-term loan that you pay back, typically within 30 days (or by your next payday).
Compared to personal loans, payday loans have one main drawback: the higher interest rate. The secondary drawback is that it must be paid back very quickly instead of over months or years.
However, there are some major advantages as well. You can get a payday loan so long as you have steady employment, making it a good choice for those with low credit. And in some cases, you may even get approval and funding from a payday loan quicker than from a personal loan.
The Necessity of Finance
We have written a lot about how to finance a funeral. You may be wondering what would happen if you would not (or could not) pay for everything.
Ideally, a funeral is paid for by the estate of the deceased. The executor of their will helps ensure that everything is taken care of.
If that doesn’t happen, then it falls to whoever the closest living relative is. This is likely how you were brought into the situation. But what if you can’t pay?
You can sign a release for the coroner and they take care of everything without sending you a bill. However, they will do this without holding a funeral or any other services.
Long story short? If you want to hold a proper funeral, you’re going to need funding.
Borrowing Money: Multiple Factors
All of this brings us to the final question. Exactly how much money should you borrow?
Remember, the funeral costs are only one part of the equation. If you need catering or other services for the funeral or the wake, that will cost extra. The same goes for any special services you purchase from the funeral home.
We recommend adding everything up and then borrowing that amount plus an additional 10%. This provides a nice safety margin so you are not strapped for cash if your calculations end up being slightly incorrect.
Paying for a Funeral: Next Steps
Now you know how loans can help with paying for a funeral. But do you know who can provide the funding that you need?
We specialize in helping with installment loans, payday loans, and more. To see how we can help with all funeral expenses, just contact us today!