It’s true that some funeral homes and some lenders do specialize in loans to cover funeral costs. But you won’t know if you’re getting the best deal possible if you accept their terms too quickly without comparing other options.
To find the best funeral financing option for your situation, you must shop around first. Here’s a guide on how to do that the right way.
What’s a Funeral Loan?
Funerals can cost more than $7,000 according to the National Funeral Directors Association. Some cities provide low-income residents with a little help to cover costs ($900 in New York).
You are entitled to an itemized list of prices for different services you’d like in the funeral, according to the Federal Trade Commission. That may include caskets, embalming, and memorial services.
Generally, it’s up to the families to pay the entire cost. That’s why it’s always better to make pre-funeral payment arrangements before they’re needed. But if that’s not possible, consider taking out a loan.
Funeral loans can up to $25,000, and some specialized lenders can charge interest rates as high as 15.49%-34.99%. Individual funeral homes may also offer alternative funding options such as trusts.
The thing to remember is that a funeral loan is just a personal loan. Personal loans are offered by a variety of banks and alternative lenders. They can be used for almost any personal expense, such as a big purchase, debt consolidation, or paying for a funeral.
You Can Get Better Terms with a Personal Loan
Personal loans are not as specific as funeral loans (you can use them for many things). Thus, you’ll have a better chance to secure favorable rates and terms through a personal loan.
There are many kinds of personal loans. Fixed and variable rate loans are some examples. Payday loans are generally one of the most expensive loans as they charge high rates. Loans for people with lower credit may be secured loans and require a collateral to back them up.
Whatever personal loan you think is right for you, the most important thing is to compare the rates and terms on different loans for which you qualify.
SuperMoney makes this laborious process easier is through its loan offer engine. With SuperMoney’s personal loan offer engine, you submit just one form and multiple lenders compete to offer you a loan.
The best part is that it won’t affect your credit score because the loan offer engine does a “soft pull” of your credit score.
The engine helps you compare multiple loans at a glance. So when planning a funeral, for example, you don’t have to go to multiple funeral homes or online funeral lenders. The tool allows you to find the best rates and terms available to you.
Top lenders for funeral loans
Leading lenders such as SoFi offers competitive rates to borrowers with good credit scores and high incomes. It has issued more than $20 billion in loans to over 380,000 borrowers.
Another SuperMoney favorite, LendingClub, is America’s biggest personal loan marketplace. It has low rates and has issued $26 billion in loans to nearly two million borrowers. It issues loans as low as $1,000.
For those with less-than-great credit, there are also financing options available. OppLoans, for example, lends to customers with credit scores between 500 to 600 and operates in select US states.
Although OppLoans has higher rates than prime lenders, they are still more competitive than payday lenders and other lenders that target borrowers with poor credit.
Rise is another for lower credit score consumers. It caters to people with credit scores from 300-650. Rates vary from 36% and up.
For both OppLoans and Rise, you can apply for loan amounts as low as $500.
Relieve Some of the Pain from an Already Painful Situation
When planning a funeral and grieving the death of a loved one, the last thing you want to do is worry about cost. But with the funeral industry so big and ceremonies are so expensive, it’s an inevitable concern.
The best way to mitigate the stress of paying for a funeral is to plan beforehand. Have the difficult conversations with your loved ones on how they would like their funerals. Set aside money for that fateful day.
If that’s not possible, the next best option is to figure out how to finance a funeral. Check to see if your city offers any relief to low-income residents. If not, a personal loan might be your best bet.
SuperMoney knows that most people don’t want to spend a lot of time comparing the rates and terms on various loans. This particularly when they’re preoccupied with emotional issues. It built the personal loan offer engine so consumers can submit one easy form and hear from multiple lenders.
Whatever option you choose, having knowledge is the key to making an unpleasant situation a little easier.