Key learning points
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You can use a personal loan to cover various wedding expenses, such as a professional photographer or caterer.
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How much a wedding loan costs depends on several factors, such as your interest rate, repayment term and loan amount.
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Whether you qualify for a wedding loan and how much you can borrow usually depends on your income, credit score, and outstanding debt.
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Before using a personal loan to finance your wedding, consider alternatives such as a low APR promotional credit card or personal savings.
Whether you fancy a big, extravagant wedding or a small, casual affair, you may find yourself short on cash as you delve deeper into planning the details. This is where a wedding loan can be useful to make your big day a dream.
Marriage loans make sense for some scenarios, but not all. Weigh the alternatives before taking out a loan so you can be sure you’re starting your life with your new partner on the right financial footing.
What is a wedding loan
A wedding loan is often a personal loan used to cover various wedding costs, including the wedding venue, catering and a videographer.
A wedding loan is marketed to engaged couples planning a wedding. Some couples can use a wedding loan to finance certain parts of their big day, such as upgrading catering options, while others use financing to pay for the entire event.
These loans are easy and quick to apply for; many lenders will even approve you online in just a few minutes. The interest rate you receive varies and is generally based on your income, credit score, and current debt.
Although some loans are marketed specifically as wedding loans, you are generally free to use any type of personal loan to cover wedding costs, including mortgage loans.
The cost of a wedding loan
How much a wedding loan costs depends on several factors, such as your loan term, interest rate and how much you want to borrow. With a personal loan calculator you can easily determine exactly how much your loan will cost.
The following table shows the cost of a three- and five-year loan at an annual percentage rate of 10 percent.
| 3-year $10,000 wedding loan at 10% | 5 year wedding loan of 10,000 at 10% | |
|---|---|---|
| Monthly payments | $323 | $212 |
| Total interest paid | $1,616.19 | 2,748.23 |
| Total financing costs | $11,616.19 | $12,748.23 |
When should you get a wedding loan?
It’s easy to get carried away when planning the wedding of your dreams, especially with the constant influence of social media platforms. But it is not recommended to take a wedding loan unless it is necessary.
When you decide to take out a loan, remember how crucial a bigger budget really is. If you can somehow reduce the cost to better suit your available resources, then a wedding loan may not be necessary and you will have saved yourself thousands of dollars.
Since wedding loans are unsecured, you don’t need to put anything up as collateral. While this reduces your personal risk, it increases the lender’s risk, meaning it’s harder to get approved and get a competitive interest rate without a good credit score. But if you have excellent credit, you may be able to get a large loan at a low interest rate.
Advantages and disadvantages of marriage loans
When considering whether to finance your wedding, it’s important to consider the pros and cons before signing up.
Benefits of Marriage Loans
- Soft credit checks: Lenders that offer wedding loans often allow you to pre-qualify so you can see the loan offers available to you without hurting your credit.
- Potentially lower interest rates: Compared to credit cards, wedding loan interest rates are usually lower and can save you thousands of dollars.
- Longer repayment terms: Most wedding loans offer repayment terms of three to five years, so you can take your time paying off your wedding.
- These are unsecured loans: Because marital loans are unsecured, you don’t risk losing your home, your car, or other assets you own if you can’t pay them back.
Disadvantages of Marriage Loans
- Involve taking on debt: Marriage loans can put you in a serious debt cycle, especially if you already have other debts.
- Interest rates can be high: If you don’t have a good credit score, you may have to settle for a high interest rate, which can increase the overall cost of your loan.
- Can lead to unnecessary expenses: Wedding loans can cause you to spend money on upgrades and extras that you wouldn’t think about if you were paying for your wedding with the money you have on hand.
How to Apply for a Marriage Loan
Follow these five steps to apply for a wedding loan:
- Check your credit: Find out where your credit stands by checking your credit score. If you don’t have the best credit, you may want to take steps to improve it before applying for a loan.
- Shop for lenders: There is no shortage of wedding loan lenders – from banks to credit unions. Check each lender’s credit requirements, financing times, loan rates and terms so you can determine which ones are best for you.
- Make sure you prequalify: Many lenders offer a prequalification process that won’t affect your credit score and can give you an idea of the loans available to you. To prequalify, you must complete a short form with your personal information.
- Compare offers: Carefully compare the wedding loan offers you receive. Consider interest rates, conditions and costs. Choose the most favorable option that will save you the most money.
- To apply: Once you have decided on a wedding loan, complete the formal application. Most lenders offer fast approval to qualified applicants and typically deposit funds within a few business days or even 24 hours.
Alternative options for wedding financing
If a personal loan isn’t in your wedding plan or you don’t think it’s the best fit for your situation, there are financing alternatives that may fit more comfortably in your financial portfolio.
Credit cards
Some credit cards offer a 0 percent introductory APR for a specified period (usually between 12 and 24 months) after you open the account. This means you have time to pay off the balance without being charged interest.
A 0 percent APR credit card can be a great way to pay for vendor deposits and other immediate costs that you can’t cover right away but can pay off over the next few months. Make sure you can pay off the amount before the promotional period ends.
Personal savings
Try to save for a wedding for a few years. It will be better in the long run to build a wedding savings account that you and your fiancé have because you won’t have to pay interest on loans or credit cards used to finance a wedding.
Ways to save
- Make a budget: Look at your monthly income and expenses. Then, come up with a budget that fits your lifestyle needs and allows you to save for a wedding.
- Take advantage of credit card benefits: Many credit cards offer rewards like cash back and points that you can redeem for free or for discounted items like airline tickets, lodging, or gift cards.
- Automate savings: Make sure that part of your paychecks automatically goes into your wedding savings account. This allows you to save without much thought or effort.
Help from relatives
Some family members may be willing to help you pay for a wedding. If a family member wants to help foot the bill for the big day, this is a great way to finance a wedding without having to take out a wedding loan, use a credit card or dip into your own savings.
it comes down to
With the cost of an average wedding steadily rising, fewer people can finance their big day out of pocket. Marriage loans are becoming more widely available due to demand and can offer more favorable interest rates than credit cards and other financing options.
But before you get yourself into debt, consider whether you need to finance the wedding costs or whether you can lower the overall price by making a few small sacrifices that won’t impact your experience. If you decide that financing a wedding with a personal loan is the right move for you, research and compare the rates and fees of many lenders to find the best deal.
