Weddings are expensive. Should you take out a personal loan to pay for it all? We take a look at the pros and cons of taking out wedding loans.
So, you’ve got an idea of what you want from your dream wedding down to the venue, food menu, and decor. But there is just one little problem: The wedding costs more than you and your partner can afford.
If you’re weighing teetering on the idea of taking out a wedding loan to cover the expenses of your big day, this article is for you.
We’re going to tell you everything you should know about wedding loans and whether they are a good choice. So, keep reading for more!
What is a Wedding Loan?
To get started, there is no particular loan that is specifically called a “wedding loan.” So, that isn’t something you can request by name at your bank or another lender.
Instead, you would obtain a personal loan with the intention of using it to pay for your wedding. With this option, you don’t have to prove you’re getting married or anything like that.
You can use a personal loan for any personal reason that you choose, just as the name implies.
How to Get a Loan for Your Wedding
When you are applying for a personal loan, you have two different loan options. You can choose between either a secured loan or an unsecured loan.
A secured loan is one where the lender requests that it be backed by collateral. Valuable items like stocks, bonds, jewelry, and cars can be used for this purpose.
The point of having collateral is to give a lender an alternate method of being repaid for the loan in the event that you don’t have the cash to settle the debt.
On the other hand, an unsecured loan is a complete opposite. This type of loan doesn’t require you to use collateral.
Instead, your income and financial health are analyzed during the application process. Additionally, there are personal loans designed for people who don’t have great credit.
These personal loans no credit check are usually fast and easy money. Payday loans fall into this category.
The Application Process
What you go through during the application process for a personal loan depends on the type of lender you are looking for borrow from. For example, you can physically walk into your bank or credit union to apply.
If you go to a financial institution you are already doing business within that way, it is possible that your history will help you secure a lower interest rate. With that said, the interest you pay generally depends on your credit score.
Web-based lenders are also growing in popularity. Applying for a loan over the internet usually only takes about 10 minutes or so.
Also, the majority of these lenders will deposit the funds into your bank account in two days or less. With some, you will have the money within an hour.
The information that is required will depend on the specific personal loan you are applying for. Generally speaking, most lenders will want your:
- Social security number
- Employment status
- Home address
- Phone number
- Email Address
In addition to those items, some lenders may ask for a cosigner if you have bad credit unless you are applying for a no credit check loan. When deciding which category you fall into, you should keep in mind that most lenders want you to have a credit score of 660 or more and a debt to income ratio below 40%.
Should You Take Out a Wedding Loan?
When it comes to weddings, taking out a loan isn’t usually a good idea. You shouldn’t start your married life with debt that can easily be avoided. You should start in more of a clean slate.
This advice is especially true if you or your partner already have student loans or credit card debt. Putting a wedding loan on top of that can add even more of a financial burden in the relationship.
Furthermore, the average cost of a wedding is $30,000. That money could serve a much more productive purpose in your life, especially if it is borrowed.
For example, it could go toward purchasing your first home, paying off old bills, or putting money toward your joint retirement. Those things will do a lot more for your future as a company than a celebration that only lasts a day.
It is also important to note that certain types of debt like mortgages and student loans are considered “good debt” whereas credit card debt and personal loans are generally considered to be “bad debt.”
Alternatives for Paying for Your Wedding
If the costs and figures for your wedding are too high to pay out of pocket, you should think of alternatives to securing a loan. Here are some examples:
1. Cut Costs with a Strict Budget
Most people start planning their weddings a year or so in advance. This is plenty of time for you and your partner to commit to a strict budget that allows you to save money for your big day.
This can involve cutting back on costly habits like eating out or even using an all-inclusive cable package.
2. Sell Things You No Longer Need
Moving in together and getting married is often followed by the realization that you need to downsize. After all, you don’t really need two microwaves or two kitchen tables, do you?
Selling your duplicate items and the others that you simply don’t use anymore is a great way to raise money for your wedding. And with sites like Craiglist, eBay, and Letgo, it’s easier to do now than ever before.
3. Earn Extra Income as a Couple
Working a side job in addition to your full-time job can interrupt some of the quality time you enjoy spending with your partner. But it might be a necessary step to take when it comes to paying for your wedding.
A way you can earn extra without your bonding time suffering is to decide on a method to make money together. For example, you two can do something like run a dog walking business on the side or sell crafts.
Additionally, you can freelance certain skills like tutoring, photography, or writing. Be creative when coming up with options. The sky’s the limit.
Simply put, wedding loans aren’t a great idea. But if you want to find some great wedding ideas, check out our website.
We have you covered with even more budgeting tips and other advice.