You may be here because you are worried about how you will meet the costs of a loved one’s funeral in the future or you are recently bereaved and are looking into funeral loans as a financing option.

As discussed in our previous article, funeral loans are personal loans that are taken out to pay for your funeral expenses. They are one of the most convenient and financially sensible ways for you to cover the costs of a funeral, however before you decide to apply it is important that you understand the advantages and disadvantages associated with funeral loans in order to make an informed decision.

Advantage 1: You may receive a Lower Interest Rate than with Most Credit Cards

A funeral loan is probably something you never want to have to take out or even think about. However, if you do find yourself in this situation and you need to cover funeral expenses, a funeral loan may offer a lower interest rate than using a credit card.

Not only will you avoid a potential revolving debt trap – because your loan has an end date whereas your credit card will depend on the payments you make – but if you have a good credit history you may benefit from a lower interest rate.

Advantage 2: You Can Use a Funeral Loan for a Variety of Funeral Expenses

Funeral loans are flexible in that they can be used towards a variety of funeral expenses.

On top of the funeral itself, you may need to pay to bring a loved one home if they died abroad or interstate, while you may also wish to pay for a custom gravestone or a different permanent memorial. A funeral loan can help you cover all these expenses at once, removing your stress and worry at every stage.

Advantage 3: There’s No Risk to Your Personal Property or Assets

Funeral loans are unsecured loans, meaning you don’t need to put up your home or your car, for example, as collateral against the loan. While missing payments would have an impact on your credit score and your ability to borrow in the future, at least you know there isn’t a risk of you losing your vehicle or your home.

Advantage 4: You Can Take Advantage of Flexible Repayment Terms

When you take out an unsecured funeral loan you can take advantage of flexible repayment terms and choose the terms that suit your affordability and circumstances.

You can:

  • Choose how much to borrow.
  • Decide to repay over a period of up to 84 months.
  • Select weekly or fortnightly repayments to suit you.
  • Repay the loan early or make additional repayments as you wish.

Advantage 5: Quick Application Process

Whether you’re dealing with the death of a loved one or planning ahead to pre-pay for your own funeral, the last thing you want is the hassle of a long and cumbersome application process. Applying for a funeral loan or payment plan is quick and easy, and can take as little as 10 minutes, ensuring you can be spending time where you need to be.

Advantage 6: It May Boost Your Credit History

Since 1st July 2018, it has been mandatory for the Big Four banks in Australia to be undertaking comprehensive credit reporting (CCR), while a large number of banks and non-bank lenders are also beginning to participate in this reporting system. With CCR additional data such as repayment history information, if you take out a funeral loan and constantly make payments on time, you may boost your credit history and demonstrate that you’re a reliable borrower.


Elderly Couple at home considering funeral Loan advantages and disadvantages

Disadvantage 1: If You Have a Poor Credit History a Funeral Loan May be Expensive

If you have a poor credit history you may be offered a high, unattractive interest rate when enquiring about a funeral loan. This means that a funeral loan could be expensive in terms of interest as well as the loan sum itself, and may mean you wish to explore other means of meeting these expenses.

Disadvantage 2: You Could Over-Borrow Unnecessarily

If you were to borrow $20,000 when you only needed $10,000, for example, then you could end up paying back more in interest even if you did use the excess sum to make a lump repayment early during the loan period.

You can stop this happening to yourself by ensuring you’re aware of the funeral costs before you apply for a loan or a payment plan, and then you can borrow only what you need.

Disadvantage 3: You Might Change Your Mind

Once you have received your loan and paid the funeral director, you are unlikely to be able to change any of the significant details of the loan. Likewise, if you decide that you would have rather met this expense a different way, you may not be able to get the money back from the funeral director to cancel and repay the loan so you can then pay them again.

While you may have the option of making additional repayments or repaying the full loan amount early depending on the lender, we encourage you to take your time choosing the right option for you so you don’t end up with “buyer’s regret”.

Indeed, before taking out a funeral loan at all, ensure you have considered the pros and cons of doing so in full and are happy with what you are doing in your circumstances.

Funeral Payment Plans with MacCredit

Operating since 2004, MacCredit is Australia’s Premier Payment Plan Specialist, providing funding solutions to over 20,000 Australians every year. They aim to match you with the most affordable payment plan for your circumstances. This allows them to avoid promising cheap deals or interest rates only for the customers to end up paying more than they thought they would. MacCredit is committed to providing a reliable and professional level of service, ensuring that their dedicated team assists bereaved families with every aspect of their application process.

If you are considering or searching for an affordable and flexible payment plan to cover funeral costs, you can click here to learn more about how MacCredit can help. Alternatively you can contact us directly on 1300 884 355 or online by leaving your details on our page.


Disclaimer:  This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs.  Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.