Facing an impending funeral can be a challenging process filled with grief and shock. It often comes with costly expenses, resulting in the need for financial planning and funds. Funeral arrangements may surprise you with their unexpected and substantial costs.
Using personal loans and other financing methods can help you through this stressful time. Let’s go over the average funeral expenses, financing options, and how to decide if a personal loan suits your needs.
Understanding funeral expenses
Funeral expenses may include the casket, burial, cremation, transportation, funeral services, memorial services, and other associated fees. How much each funeral component costs can vary greatly depending on your location, funeral home, and personalization choices.
It is typically advisable to save up at least $10,000 for funeral expenses even though the average funeral cost is around $8,000. Rounding up helps ensure that you have enough for any miscellaneous or unforeseen funeral expenses.
Burial or cremation
The standard burial costs around $7,000 to $10,000.
If cremation is chosen instead, the overall expenses will likely be lower than traditional burial expenses. A direct cremation typically ranges from $1,500 to $4,000.
Memorial and funeral services
Funeral services vary in cost depending on how extensive you want the memorial service to be. Memorials honor the deceased. Their average cost is around $6,000.
You can also expect to pay a basic services fee if you obtain the services of any funeral providers. This will cover essentials such as:
- Funeral planning
- Preparing notices
- Death certificates
- Coordinating the various arrangements
- Sheltering the remains
The casket is often the most expensive part of funeral expenses. If you’re planning a traditional full-service funeral with a casket, it is important to research your options. The average casket will cost around $2,000, but if you want a more intricate design or special material, it can easily go up to $10,000.
Transportation of the deceased’s body can cost around $200.
Newspapers charge a few hundred dollars for full obituaries. How much it costs to publish an obituary varies based on the newspaper’s circulation and whether you want a full-length obituary.
Floral arrangements are priced at a few hundred dollars for more elaborate displays.
You might want to factor in the cost of other commemorative activities. These can range from several hundred to several thousand dollars based on the scope and extent of the activities.
Common financing options for funerals
Using personal savings is the most straightforward method for individuals and surviving family members to finance funeral expenses. The benefit of dipping into personal savings is that it will not create a debt burden that needs to be repaid.
Life insurance payouts and their limitations
The average life insurance payout to the policy’s beneficiary is around $170,000. However, the exact amount depends greatly on certain factors, such as:
- Value of the policy
- Type of policy
- Cash value withdrawal
- Optional features added to the policy
It usually takes 14 to 60 days for life insurance companies to grant beneficiaries life insurance payouts. The money can be used for paying off funeral fees.
Funeral service payment plans
Many funeral homes offer payment plans for those who need more affordable financing options. They generally allow you to pay for the expenses in fixed, regular installments. That way, you can avoid paying a significant amount upfront.
Government assistance or community funeral grants
The government offers grants to help provide financial support to individuals and families who are financially burdened. However, the funeral grants may be limited or depend on your eligibility.
Veterans and eligible dependents can benefit from burial benefits provided by the Department of Veterans Affairs (VA). The detailed benefits and requirements can be found on the VA’s burial allowances page.
Using personal loans for funeral expenses
Personal loans can be a valuable method of financing all aspects of funerals. If you are approved for a personal loan, the lender will disburse a lump sum amount of funds into your bank account. Over the course of the loan, you will be expected to repay the initial loan amount plus interest.
Here are the main advantages of using personal loans for funeral costs.
Rapid funding during time-sensitive situations
Many lenders can disburse loan funds to your account quickly after loan approval. If you need funds within a few days or a week, personal loans are a reliable way to access significant funds. This can help you promptly pay for any funeral arrangements.
Flexibility of funds
Personal loan funds and terms are typically highly flexible. You can use any remaining funds for other needs, and you can negotiate more favorable repayment terms as needed.
Simplified financial planning
Most personal loans have fixed interest rates and predictable terms. This helps individuals and families better plan for the structured loan repayment each month. If you face budgeting and financial challenges, the predictability of fixed-rate personal loans can be especially advantageous.
What do lenders consider when approving a loan?
Lenders assess various factors when reviewing your loan application. The main determinants are your creditworthiness and financial stability, which contribute to how well you can manage the loan repayment terms. Here are key points that lenders take into account when approving a personal loan:
Pros of using personal loans to fund funeral arrangements
Preserve your personal savings for other family needs
Besides funeral expenses, you and/or your family may encounter other financial challenges and obligations. Even everyday necessities such as groceries can pose a greater strain on you. One advantage of obtaining a personal loan is that you will not need to deplete your savings for funeral-related costs. That way, you can keep the personal savings for other essential bills and priorities that come up.
In addition, using a personal loan to fund funeral arrangements ensures that you don’t need to dip into your emergency savings. This helps you maintain your financial stability.
Enjoy lower interest rates
Compared to credit cards, personal loans typically come with lower interest rates. A lower interest rate means a lower cost of borrowing, allowing you to save more in the long run.
Note that if you have poor credit, it might be difficult to obtain a new personal loan with favorable terms.
Have clear repayment terms
Most personal loans are repaid in fixed monthly installments, resulting in more manageable financial planning. The predictability of fixed-rate personal loans can help mitigate the impact of the debt burden.
Considerations when thinking about a personal loan for funeral costs
Total cost of the loan
Be aware of the total cost of taking out the loan. The interest rate isn’t the only cost of borrowing. There may be additional fees for application and processing, along with potential penalties if you don’t meet the agreed-upon loan terms.
To get a clearer understanding of your loan’s total cost, review the loan agreement carefully and compare the annual percentage rates (APRs) of various loan offers. The APR will show you the cost of taking out the loan in a year. Using online tools can also help you estimate how much interest you can expect to pay throughout the loan tenure.
Loan agreements and terms
Before signing a loan agreement, make sure that you fully understand the terms of the loan. Know the impact of missing payments or defaulting on the loan, and clarify any potential fees and penalties.
Your financial standing
It’s important to consider your current financial position and estimate how that will change over time. Many individuals and families face new financial and emotional challenges after the death of a loved one. If income has been drastically affected, it may hurt your ability to meet the loan terms.
The emotional implications
Managing debt obligations during a period of grief can be difficult for many people. Needing to make regular, on-time monthly payments can be daunting.
If you believe that you will not be able to adequately manage loan repayment while grieving, it may be a good idea to consider alternatives to personal loans.
Alternative solutions to offset funeral expenses
Community contributions can be a way to offset and fund funeral costs. Crowdfunding and social media platforms can not only bring financial assistance, but also spread a heartfelt and moving story about the deceased. Popular crowdfunding platforms include GoFundMe and Kickstarter.
As you share the story and your need for covering funeral funds, it is a good idea to regularly update with photos and messages to donors. This helps personalize the campaign and encourages community members to share the campaign with others who might be able to make helpful contributions.
Note that while crowdfunding can offer many financial benefits, there is no guarantee that it will allow you to raise enough money for all the funeral expenses.
Pre-need funeral plans and prepaid funeral arrangements
It is possible for individuals to prepay their funeral. This can be done by paying a funeral director who will provide a Pre-Need Funeral Agreement. Prepaid funerals can make it easier for beneficiaries and loved ones to manage funeral arrangements. However, they do come with limitations depending on which funeral home you choose.
Negotiating with service providers
Many service providers are willing to offer cost-effective packages if you are persuasive during negotiations. It is common to research and compare the costs of different funeral service providers before negotiating with your desired providers so that you can make well-informed choices.
Here are common strategies used to boost the chances of a successful negotiation with service providers:
- See if the provider is willing to customize an existing package or bundle
- Request an itemized breakdown of all goods and services
- Obtain multiple quotes from different funeral homes
- Remain professional and polite
- Inquire about discounts
Seeking assistance from local religious or community groups
If you’re facing challenges related to funerals and grief, you might benefit from the support of local groups. Other community members can surround you with empathy and understanding during these hard times. They may also be able to offer valuable advice, especially those who have gone through similar circumstances.
In addition, seeking help from community organizations may be able to provide you with donations. These financial contributions can alleviate your funeral-related debt burdens.
While most funeral homes accept credit cards, they might charge you an extra convenience fee for using a credit card to pay. Credit cards are also associated with higher interest rates than personal loans. If you urgently need to fund funeral arrangements but have poor credit, using an existing credit account may be a more realistic option than obtaining a personal loan. However, be aware of the drawbacks of using a credit card for significant bills.
It’s hard to give loved ones a fitting, respectable commemoration while managing the financial consequences following a funeral. The death care industry has become increasingly expensive, resulting in costly funeral expenses. Personal loans can be a valuable, convenient way for you to deal with the financial side of funeral arrangements. That way, you can focus on any emotional stress you might go through as you grieve.
Obtaining a personal loan does give you a debt burden, but it significantly decreases the upfront costs needed for funding a funeral. Consider all your available options before choosing the financing option that aligns with your circumstances and priorities. In addition, make sure that your funeral loan offer doesn’t come with predatory terms and high rates that prey on those who are grieving.
Resources and further reading
Here are a few reputable lenders who have offered personal loans for funerals.
Before you sign any loan agreement, make sure that you compare different loan offers and terms so that you can make an informed, favorable decision.
Personal Loans Company Reviews
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