How to Finance a Funeral

You have a lot to deal with when a loved one dies, particularly if there was an emergency or that person was unable to plan his or her funeral in advance. In addition to figuring out how to best honor the person you have lost, you must wrangle with costs. If funeral costs prove to be more than you can afford to pay in cash, financing a funeral may be the only option.

What costs are associated with funerals?

The last thing you want to do when you lose someone important is to shop around for the lowest funeral price. And yet, carefully budgeting for the event may be required. Here's a sampling of the costs associated with the average funeral, whether you opt for traditional burial or cremation:

• Basic service fees
• Transfer of remains to funeral home
• Embalming
• Preparation of the body
• Casket
• Vault or burial plot
• Headstone or grave marker
• Flowers
• Officiant
• Death certificate(s)
• Cost of travel and lodging if you travel for the funeral

How much should I expect to pay for a funeral?

Depending on the state in which a person is buried, the average cost of a funeral and burial ranges from $6,700 to $15,000. Since getting to that number involves such a long list of variables, your choices on everything from preparing the deceased to the type of funeral service could make the actual number lower or considerably higher.

That's because one person planning a funeral may insist on a high-end casket, and another may care more about flowers or hiring a bagpiper. Some people opt for a burial service, while others would rather skip it. Further, costs vary widely by funeral home. Complicating the issue is the fact that you want to give your loved one the best send-off possible.

It helps to go into the funeral-planning and financing process with a clear sense of what constitutes "average" for the options you would like. If the price you are quoted is higher than average, you know one of two things: Either the funeral home you are working with is particularly expensive, or to lower costs, you may need to reconsider options and trim anything you can do without.

Funeral financing options

Here are a few ways to cover funeral costs.

Personal loan

When a funeral home talks about "funeral loans" or "funeral home financing," they are referencing a personal loan. Personal loans are available through banks, credit unions, and online lenders, and are regularly used for financing funerals. For borrowers with the best credit, interest rates can be competitively low, and some personal loans offer borrowers as much as $100,000. Once you commit to a loan, the entire amount is disbursed within days. You make regular monthly payments for a set period of time (referred to as the "term") until the loan is paid off. In addition to interest, some lenders tack on other charges, like origination and late fees, so shop personal loan providers carefully. Remember, your emotions are likely to be running high during this time. If it helps, bring someone you trust along to help you keep track of the financial details, or consult with someone to help you review options before making a decision.

You can use the calculator below to determine the monthly payments for loans with different amounts and repayment terms.

Home equity loan

If you owe less on your home than it is worth, that means you have equity, and that equity can help with financing a funeral. Let's say your home is currently worth $300,000, but you owe $200,000 on the mortgage. You have $100,000 in equity. Typically, a lender will loan up to 85% of that equity, or in this case, $85,000. You receive the money in a lump sum and repay it in equal monthly payments. Depending on the size of the home equity loan, it may take you anywhere from five to 30 years to repay the debt. Because the bank uses your home as collateral, the interest rate on a home equity loan is likely to be low. However, if you miss payments, the lender has a legal right to repossess the property.

Home equity line of credit (HELOC)

Like a traditional home equity loan, a HELOC is based on the equity in your home, and your home acts as collateral. A HELOC differs from a home equity loan in a couple of ways:

• A HELOC acts as a line of credit rather than a one-time loan, allowing you up to 10 years to withdraw money as needed, and 20 years to repay those funds.
• Once you repay any portion of the HELOC, you are free to withdraw the money again.

Credit card

If your portion of financing a funeral is small, there may be a way to finance it without interest. Say the funeral comes to $10,000, and your share is $2,000. Other family members cover the rest. As long as you can pay it off before the end of your billing cycle, you can put the expense on a credit card without paying interest. If the bill is higher or you need a bit longer to pay, apply for a 0% promotional rate credit card. These promotions usually last for 12 to 18 months, so be sure to pay it off before the promotional rate expires. Let's say you charge $3,600 and have 18 months of 0% interest. If you pay $200 per month, the credit card will be paid off by the time the promotional rate expires.

How to finance a funeral

The first thing any traditional lender will require for funeral loans is a loan application, at which point your credit score comes into play. Check your credit report, find out where you stand, and boost your credit score if necessary. Borrowers with the highest credit scores snag the lowest interest rates and are most likely to qualify for 0% promotional rate cards. A high credit score offers you options not available to everyone when it's time to finance a funeral.

Important note: If you have agreed to split the cost of a funeral with others, only finance your portion. Do not borrow money to cover anyone else's part. Sure, people close to you may follow through, but it's not worth risking having to pay the entire amount back by yourself, and possibly losing a relationship in the process.

When deciding how much to borrow, remember: The relative "fanciness" of the funeral is not likely to matter. What you will find important in the upcoming months are memories of your loved one.

Alternatives to funeral financing

Before paying for anything, check whether the decedent had an insurance policy or prepaid funeral plan to cover the costs. Here are a few other options that can help you avoid financing a funeral:

• Ask family and friends to chip in to cover the cost of a low-cost funeral so that no one has to take out a loan. It is possible that other people will appreciate memorializing your shared loved one by contributing.
• Skip anything that is not absolutely necessary, like embalming (not every state requires it).
• Shop online for caskets and other funeral-related items to keep costs to a minimum. You do not have to purchase these from a funeral home. Don't forget to check retailers like Costco or Sam's Club.
• Look into any clubs or organizations the decedent was part of. Some have a special fund to help members, even with final expenses.

Finally, if you absolutely cannot find the money to bury your loved one, most county coroners' offices will allow you to sign a release form saying that you cannot afford to pay for the burial. At that point, the county and state will pay to bury or cremate the body.

Losing someone you love is hard enough, and it can certainly be made worse by the myriad of tasks and expenses you face following their death. The best advice is to take it one step at a time, stay informed about your options, and be kind to yourself as you go through one of life's most significant challenges.