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.
Those are my top 3 Best Personal Loans
- Admin. fee: 0.99% - 5.99%
- Annual income of $80,000
- Min credit score of 640
- Failed payment fee: $15
- Day of Grace: 3 days
- Grace period fee: $25
- Administrative fee: 0% - 8%
- Min credit score of 620
- Quick funding - 1 Day
- Grace period fee: 5% Max $15
- No prepayment penalty
- No fees
- Low interest rate
- Fixed Rates
- Min credit score of 680
- Unemployment protection
- SoFi member benefits
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.
How To Get The Best Rates
The minimum qualifications for any lender will differ from company to company, but there are some ways you can ensure you’ll access the best wedding loan rates possible. The first thing to do is to work on boosting your credit score. Although you can meet the minimum and still qualify, a higher score will unlock lower interest rates. Additionally, you should shop around while exploring user and expert reviews covering the best wedding loans to uncover a lending option that matches your need and what you’re seeking from your loan.
Wedding Loan Alternatives
If you’re not sure about adding debt to your finances, there are still some ways you can plan the wedding of your dreams:
- Ask for financial help from family and friends such as your parents, who may be willing to help.
- Scale down your expectations; you can still have an amazing day even without those ice sculptures.
- Start budgeting and saving early. If you know what your goal is, you can slowly work toward it without debt.
- Find friends with skills they’d be happy to help with. Is one of your family members an amateur photographer? Or maybe an aspiring chef? This can help keep costs down and give your family and friends a platform.
Wedding Loans vs. Credit Cards
When planning your finances, you may be confused at the difference between a wedding loan and a credit card. It’s true that both are short-term financing solutions, but that’s where similarities largely end. Personal loans for weddings are designed to have a fixed repayment period, so that once you’ve made the last payment, you’re fully done. Credit cards, on the other hand, are known as revolving debt—you’re constantly accruing new debt and repaying it. This means that while you may have access to the same funds, you may end up paying significantly more, for longer, if you use your credit card.
Additionally, personal loans tend to offer loan amounts that can be much higher than credit card limits. This means that you may be able to keep your debt to a minimum by making a single payment with a personal loan as opposed to multiple ones with a credit card. Finally, credit cards in general are accompanied by higher starting interest rates than personal loans, which can go as low as 5.00% in some cases.