A funeral loan is a personal loan that is used to pay for funeral or burial expenses. This type of loan is not specially designed to accommodate funeral or burial expenses. Instead, the funds can be used at your discretion. However you decide to use them, you are responsible for repayment at the terms specified in the lending agreement. Personal loans are available through banks, credit unions, and other alternative lenders.
The document evidencing the debt, e.g. a promissory note, will normally specify, among other things, the principal amount of money borrowed, the interest rate the lender is charging, and date of repayment. The loan will entail the reallocation of the subject asset(s) for a period of time, between the lender and the borrower.
The interest provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent.
Acting as a provider of loans is one of the main activities of financial institutions such as banks and credit card companies. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.