Funerals and the increase in non-bank lending

Before we get to funerals and the increase in non-bank lenders, as I sometimes do, I would like to revisit a few issues that we have discussed in past columns.

It is summer and wedding season. We have discussed the potentially high costs of a wedding, and some ways to keep the costs down. As part of those discussions, I speculated that everyone could use money, and that many couples might even prefer it to a physical gift. It is understandable today, given the student loan and other debt that many young couples are carrying. Also, today many couples live together for some time before marriage, and have already acquired a lot of the “stuff” that they need as a couple.

As a result, I was not surprised to see an American Express Spending & Saving Tracker report that indicated that 49 percent of couples would in fact prefer cash as a wedding gift.

However, it got me wondering about how you make that happen? It turns out that there is a lot of advice on the Internet on how to politely ask for gifts of money. Here is one I liked from Confetti.co, a UK website.

“Your presence at our wedding is all that we wish for. However, if you want to give a gift, we will be grateful for a small cash donation towards our new future/house renovations/honeymoon/etc.”

Here is another:

“While your attendance alone is what we request, if you wish to buy us a gift then we have a small gift list at______, however monetary contributions towards planning our future together would also be greatly appreciated.”

On a different subject, but one of my favorites — commercials, I heard an automobile commercial recently where the announcer said of the dealership: “we are in the auto loan business.” I thought it was very interesting, because it is subject to two very different interpretations. I am fairly certain that it was intended to give potential customers confidence that the dealership could get them the financing that they needed. For me, however, it immediately reminded me of a story that I have often shared. As a young attorney in the 1970s, I can remember a downtown jewelry store owner explaining to me that he was in the finance business, not the jewelry business. That was where the real money was — financing the purchases. As we have so frequently said, many Americans pay so much more for what they purchase, because they finance the purchases.

In that regard, what can’t you finance today? I remember the days when you had to pay your homeowners and automobile insurance premium in one installment. Today you can pay in installments, but when you add up the total of the installments, they are more than the basic premium, sometimes significantly, because they include a financing or processing charge.

On the subject of non-bank lenders, it seems to me that I have been seeing many more television commercials for non-bank lenders lately. We have all seen the LendingTree and Quicken Loans commercials, but now I am seeing commercials for loanDepot, Newtek, a small business lender, and others.

I knew that most lending today was by non-bank lenders, (as opposed to traditional banks), but some research I did indicated that non-bank financial institutions, such as finance companies, mortgage companies, insurance companies, pension funds, credit unions and investment banks, actually account for 80 percent of the credit market in the United States.

Major non-bank mortgage lenders include, Quicken Loans, PennyMac, Nationstar and PHH Mortgage. Then there are the person to person lenders, like LendingClub.com, and crowdfunding sites like Kickstarter.com. Business is apparently pretty good, so I am sure that you will see and hear even more advertisements in the future.

The bottom line is that there are a lot of places that you can go for a loan today, so be careful, do your homework, evaluate and understand any risks, and be sure to read and understand everything. I certainly can’t endorse any lender, whether bank or non-bank, and you should always at least think about getting professional advice before borrowing.

Not surprisingly, like so many other things, the costs of a funeral have increased to what Funeral-Tips.com says is a national average of between $8,000 to $10,000. This includes funeral home, cemetery and grave marker expenses.

Once again, the bottom line is, that if you are aging, or have aging family members that you may have to make burial decisions for, you need to start looking at these costs, and perhaps on how you can reduce them, if necessary, depending upon available financial resources. You also should consider things like prepaying all or some of the costs to lock them in, increasing life insurance and setting up a separate savings account.

Once again, there is a lot of good discussion, tips and advice on the Internet. I liked a November 2103 article on Foxbusiness.com. You can learn about the “Funeral Rule,” enforced by the Federal Trade Commission, and tips like: shop around and get three quotes from different funeral homes; some services, like embalming, may not be necessary; a cheap casket that you can buy on the Web may be sufficient; and there may be non-profit organizations that you can look to that can help you negotiate better prices.

There is more to a burial that money, but there is no reason that you can’t get good value for what you spend and still meet all of the family’s needs in those difficult times.