We have all had situations where something requiring finances come up and you truly do not have any money. This is especially true when a loved one suddenly dies and you have to pay for the funeral expense. You may, therefore, consider the option of taking a funeral loan to help you cover the expenses. But, you have doubt because you don’t know whether this is a good idea or not.
I do not think that there is truly a clear cut way of saying whether it is a good or bad idea, because individual needs are very different and sometimes you really have no choice but to take the loan. Funeral loans are personal loans that go toward funeral expenses. The lender does not dictate what the money you do with the money and you can use it as you wish. There are many lenders who give out such loans including credit unions, banks amongst others.
Advantages of funeral loans
The main advantage of funeral loans is that the money is readily available and you can have it within a day of the application. Lenders are also quite understanding when it comes to terms of payment because you can spread the payments over some time to give you sufficient time to pay the loan back.
Some also have an option that allows you to pay off the loan early without a penalty. The application process really depends on how good your credit score is, the higher the credit score, the more likely you are to pay back the loan. The lenders will normally not have a problem giving you money.
Disadvantages of funeral loans
Quick loans come with high-interest rates due to the fact that they are usually not secured. Inasmuch as the money is readily available, getting these loans is not that simple and may require a credit check by the lender from the credit agencies. This may take some time and if there is a problem with your credit report, it could impact your ability to get the loan.
Other people feel that taking a loan for a funeral does not make sense because you will not get any returns from it. Whether or not this makes sense really comes down to an individual, it is doubtful that most people will apply for a funeral loan without actually needing it.
Talk to your financial advisor and learn more about the funeral loans before you take them. There are some packages that funeral home have in collaboration with financial institutions where they can arrange some kind of financing for those who require it. Do your research well so that you pick the lender who gives you the best benefits, at the lowest interest rates possible.
Understand the full impact of taking such a loan before you sign on the dotted line. You do not want to a loan that will take you a long time to clear or have to pay high-interest rates and any other fees attached to it.