Best Wedding Loans of 2020
A wedding is a magical day filled with amazing memories for any couple starting their life together. Getting there, however, can be a nightmare. The price of nuptials has been steadily on the rise, and today a wedding costs on average, $33,931. (theknot.com)
I got married a few years ago, and I was initially stressed about the price tag. I took out a wedding loan, and with a little help from family and budgeting, we were able to craft a truly magical experience for our guests. Even better, I’ve finished paying it off in the last year. Here is how a wedding loan can help you plan your big day.
What is a Wedding Loan?
A wedding loan is technically a personal loan that you can use expressly to help fund your wedding. This means that you’re taking out a loan for a wedding that you can pay off in short-term installments. Personal loans are either fixed- or variable-rate, but they are aimed at quick repayment in comparison to longer-term repayment plans.
Should You Use a Wedding Loan?
As with other types of financing, approval will likely depend on your current financial situation and your projected future income. The ideal reason to use a personal loan for a wedding is if you’ve already budgeted out your expenses, but don’t have the cash in hand to pay them.
For instance, if there is a payment you need to make now, even though you’re expecting the funds to become available later, you can take out a marriage loan to help you cover the costs in the meantime. Because many lenders let you pay your loan off early without any fees, you can simply defer the expense until you have the money to pay it. However, if you can’t currently afford your planned wedding—and don’t expect to have the funds to cover it over the near future—you may want to avoid adding the extra financial burden on your newly married life. Similarly, if you’re simply seeking a way to pad out your budget, even if you can’t really afford it, taking out a loan for a wedding is not the best idea.
Advantages and Disadvantages
- If you’ve already planned out your expenses, a personal loan can help cover the budget shortfall and make the necessary payments on time
- Unlike credit cards, which have higher starting interest rates, personal loans tend to have lower starting interest rates
- You can get your funds in as little as one business day, ensuring that you can have the funds accessible to pay what you need when you need to
- It can lead to spending more than you can afford if you’re not careful, adding debt just as you start a new life
- You could end up paying for your wedding party up to 10 years after the big day
How to Qualify for a Wedding Loan
Although they work similarly to traditional bank loans, wedding loans are somewhat easier to apply and qualify for than their counterparts. Even so, before you apply, you should make sure you already have the following lined up:
- Have a good to excellent credit score: Even though some companies offer wedding loans for bad credit, it’s recommended to have a credit score that’s a minimum of 630. This is the bar most lenders set, and though it may vary, a score at that level or higher will usually help secure approval.
- Keep your debt-to-income ratio low: This important ratio measures how much of your monthly income is being used to pay for existing debt. Most lenders prefer that your existing debt-to-income be lower than 40.00%, though it may vary from lender to lender.
- Have a steady source of income: Most importantly, lenders want to see you can make monthly payments on your loan. Having a steady job or source of income (or, failing that, a letter of acceptance for a job) is a big plus when you’re applying for wedding loans.