Are Wedding Loans A Good Way To Cover Costs?

It’s no secret that weddings can be expensive affairs. While the numbers are likely on the high side—a few expensive outliers can easily skew an average, and survey respondents were excited enough about their weddings to join a website and answer questions—paying for a wedding can be a tall order.

To afford a memorable event, some couples turn to loans. While you have several options for borrowing money to pay, including personal ones marketed as wedding loans, taking on debt may not be how you envision starting your shared future. Let’s review how marriage credits work and how to decide whether to borrow money to pay for your special day.

What Is A Wedding Loan?

It is a loan you use specifically to pay for the costs of getting married. In most cases, it’s a marketing term. These are personal loans, and just like any other, you’ll qualify based on your creditworthiness. Lenders use terms like marriage, engagement, and bridal loans to attract soon-to-be newlyweds, but you can use it to pay for a wedding.

Loans you can use to pay for your wedding are available from various sources. As soon as you begin searching for these products, you’ll see a variety of dedicated online lenders. Banks and credit unions also offer credits you can use to finance wedding-related costs.

Before you take out credit, get quotes from at least three different lenders. Compare the features such as interest rates and origination fees but remember a wedding loan is merely a personal one, so be wary of add-on fees.

Source: nerdwallet.com

Advantages of Using For A Marriage

  • Allows you to plan your dream event without budget constraints
  • May have lower interest rates than credit cards
  • Flexibility
  • Allows you to avoid borrowing money from family members
  • Lets you keep your savings for other expenses

Disadvantages Of Using For A Marriage

  • Requires a monthly payment
  • Comes with interest charges, which may be higher for borrowers with low credit scores
  • May encourage overspending
  • Doesn’t offer payment protection
  • May not be the most affordable option

How To Get Loan For A Marriage?

Applying for it is just like applying for any personal one. You’ll provide personal details and information about your earnings, and lenders will review your credit and income (sometimes almost instantly), then offer you an amount and interest rate. Many online lenders offer quotes after a soft credit check, so you can request multiple quotes without worrying about your credit score.

If you have bad credit, it’s even more important to compare rates from several sources, as borrowers with low credit scores may get less competitive offers. Consider taking steps to improve your credit, like paying off debts and fixing credit report errors, before you apply. Making pay stubs is better, so you know everything about your expenses.

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What Costs Can A Marriage Loan Cover?

You might be asked how you’ll use the funds during the application process. However, any personal loan—even ones not specifically marketed as others—can be used to cover wedding-related costs:

  • Venue
  • Engagement rings
  • Honeymoon
  • Catering
  • Entertainment
  • Photographer
  • Dresses and suits

Lenders typically offer a maximum amount, but you don’t need to borrow that much. Remember that you’ll have to repay every dollar—plus interest—so it’s smart to minimize your borrowing.

What To Look For In A Wedding Loan?

If you decide to borrow money, ensure it includes features that make the debt as manageable as possible.

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Unsecured

It should be unsecured, not tied to any collateral. It’s risky to borrow against your home because your lender could foreclose on it if you can’t keep up with the payments.

Low, Fixed Rate

The lower your rate, the better. You’ll pay interest on the balance until it’s gone, and those interest charges increase the cost of your event. A fixed-rate makes it easier to budget for your monthly payments. Your monthly payment will increase if you don’t get a fixed rate and the interest rate rises.

Term

A short term (the time you have to pay off the debt) helps you minimize interest costs. You keep paying interest when you let debt linger for months or years. A shorter-term results in higher monthly payments, but you’ll get out of debt sooner.

Source: credello.com

Monthly Payments

While it’s easy to focus on the total amount you’re borrowing, make sure the monthly payment fits your budget. You can potentially get a lower payment by extending the term, but that will lead to higher interest costs.

Total Interest Costs

Figure out how much you’ll pay in interest over the life of your loan. You might never notice the interest costs, but they’ll keep adding up until you’ve paid off the balance. A calculator or amortization table can help you analyze your options.

Alternatives To A Wedding Loan

Taking out a wedding loan isn’t your only option. Here are other ways to tie the knot without an unreasonable debt burden.

Source: washingtonian.com

Budget And Save

Unless you’re getting married next month, you have time to plan. Create a budget and start setting money aside to cover those costs. Pay for as much as you can yourself. You can also combine this option with taking out a smaller amount to help you afford a special splurge, like your dream photographer.

Ask Family And Friends For Help

Not every couple wants to ask their friends and family to help pay for their special day. But crowdfunding is an option, or you could ask your guests for cash instead of gifts.

Your friends and family members might also be able to offer their time and skills, so you don’t have to pay for every aspect of your wedding. Maybe your cousin has a beautiful property you could use for the ceremony, or your friend has serious hair and makeup skills.

Defer Costs

Consider holding off on those expensive engagement rings. Start with something you can afford now and plan to upgrade later in life, perhaps on a significant anniversary or whenever your financial situation allows.

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Prioritize Ruthlessly

You might have to make difficult decisions about your special day, but think about what’s most important to you and your spouse-to-be. Focus on making those aspects shine and cut costs elsewhere. Your guests will remember the general feeling of the day, not the specifics of what kind of chair you chose for the ceremony.

Bottom Line

It always helps to be prudent with your finances and also staying within budget. Even when you consider taking a personal loan to cover the marriage expenses, make sure you don’t overstep the fence in lure of easy money. It is indeed a credit, after all. Stay financially fit with these financial mantras.