Personal Loans for Funeral Expenses

Losing a loved one is hard enough. On top of such a loss, family members are often immediately hit with having to plan and pay for their loved one’s funeral. Funerals can be very expensive, and not everyone has the money in savings.

If you find yourself in this situation, you might consider taking out a personal loan to pay for a funeral. Funeral loans can help you cover the funeral costs without putting a strain on your finances. But there are some things you’ll want to know before you apply.

How much do funerals cost?

A 2023 National Funeral Directors Association study indicated that the average cost of an adult funeral (including viewing and burial) is $8,300 (this total cost can be even greater if you add in additional costs, such as a vault for the coffin, which is often required by the cemetery). This amount represents a 5.8% increase from 2021. Funerals with cremations can be a bit cheaper, at a median cost of $6,280, but this price doesn’t include a cemetery or other type of monument for your loved one. The exact price of a casket and urn will vary depending on the style and type of materials used.

Funeral expenses typically include things like the casket, burial, service, and any other fees charged by the funeral home, but it can also include hotel arrangements, food, and transportation for out-of-town guests.

What are funeral loans?

A funeral loan is essentially a personal loan that can be used to cover funeral expenses. If you don’t have the money to cover funeral expenses for a loved one, you may be considering taking out a funeral loan.

When you take out an emergency personal loan, you’ll receive an upfront sum of money that you can use to cover the funeral costs. From there, you’ll make monthly payments until the loan is repaid in full. Personal loans may come with fixed interest rates (so your monthly payments won’t change) or variable rates (which may move up or down over the course of the loan).

Using a personal loan to pay for a funeral is generally considered a less expensive option than using a credit card. For example, as of February 2024, a 24-month personal loan had an average interest rate of 12.49%. In comparison, credit cards had an average interest rate of 21.59%.

How to apply for a funeral loan

If you can’t afford to pay for a funeral out-of-pocket, a funeral loan can be a good alternative. You’ll want to find rates and terms that work with your current financial situation, so it’s important to shop around. Here are some important steps you should take when applying for a funeral loan.

Figure out how much you need to borrow

Personal loans aren’t revolving lines of credit, so you’ll need to know how much money you need before you apply. You may be in a hurry to get the funeral plans moving, but you should try to figure out what the total costs will be.

For example, if you plan to do a standard service and burial, you’ll likely need to account for the funeral director and staff. You’ll also want to consider how much the viewing and gravesite will cost.

There may be additional costs you haven’t thought of, like flowers for the service, burial clothes, and food for the guests. The funeral director you choose should be able to help you create a comprehensive list of the costs.

Get multiple estimates

If possible, it’s a good idea to meet with, and receive estimates from, at least three different funeral directors to get estimates of cost. Comparing your options will help you find a service which best meets your needs at an affordable price.

Have your paperwork ready

When you apply for a personal loan, your lender will check your credit history, income, and financial information. Having that information ready before you apply may help make the application process quicker and less stressful.

You’ll need to provide your personal information, like your name, date of birth, and Social Security number. Depending on the lender, you may also need to verify your identity with a birth certificate, driver’s license, or passport. You may also need to provide proof of income through pay stubs, 1099s, or bank statements.

You should also check your credit report so you know what your credit score is before applying. A bad credit score doesn’t necessarily exclude you from taking out a personal loan, but you may pay higher interest rates.

Submit the application

You can begin submitting your applications once you’ve identified some potential lenders and gathered the necessary paperwork. Most lenders will allow you to apply online, but some banks or credit unions may require you to apply in person. You may have to wait several days or weeks to find out whether you are approved or not depending on the lender.

Weigh your options 

As you evaluate several lenders, you should look for a loan with flexible loan terms and the lowest rates possible. Be aware that many lenders charge additional fees, like origination fees, late fees, or pre-approval fees. Read the fine print so you know what you’re getting into before you make your final decision.

​​If you’re on the fence about using a personal loan to pay for a funeral, there are lower cost alternatives like zero-interest loans or in-house financing (if offered by the funeral home or services provider) you can consider. Another option is to ask friends or family members to help out so you’re sharing the burden of the funeral costs.

The downsides of taking out a personal loan for funeral expenses

Of course, you want to consider the long-term financial implications of taking out a loan to pay for a funeral. When you take out a personal loan, you’re responsible for repaying the entire amount with interest. The interest rate will vary depending on your creditworthiness and lender. A higher interest rate means you’ll pay more money over the life of the loan. And for some people, making monthly payments on a personal loan could create a financial burden and emotional stress.

Ways you can save money on a funeral

Planning a funeral is challenging because you want to honor your loved one, but you also have to consider your financial situation if you are taking on the cost of funeral expenses. And when you take out a personal loan, you are responsible for the monthly payments. Here are some ways you can plan a nice funeral while still finding practical ways to save money on funeral expenses:

• Understand your priorities: Before you start visiting funeral homes, try to take some time to think about what’s most important to you. For instance, if the service is important to you, you may want to consider spending less on the casket and spend more on a memorial service.
• Consider cremation: If the viewing and burial aren’t important to you, you can possibly save thousands of dollars by opting for cremation. The funeral home should be able to arrange the cremation and may even deliver your loved one’s ashes to your home.
• Plan a memorial service: A memorial service will generally be less expensive than a viewing, service, and burial. Additionally, the memorial service may provide greater flexibility in terms of planning and scheduling.
• Ask your family to help out:  Consider asking family members, friends, or others for contributions or donations.

The bottom line

Funeral costs are typically expensive, and many people struggle to cover the cost of funeral and memorial services. If you’re wondering how to pay for funeral expenses, funeral loans can be a good option for your particular situation.

Loans for funeral expenses can provide some peace of mind, but you want to go about it thoughtfully. Carefully consider the costs and compare the available options, including personal loans.