Getting married and looking into getting a wedding loan? Read this guide before deciding.
Your wedding day is one of the most important days in your life. It's no wonder you want it to be perfect. Weddings can be expensive once you factor in the costs of the dress, the food, and the venue. Some people have to save for years before they can afford their dream wedding.
Wedding loans are a way to finance weddings. They often have better rates and interest than charging wedding expenses to your credit cards. It's also a way for you not to use your savings to pay for the wedding.
Wedding loans are a type of personal loan that can help you fund your wedding. Read this guide to find out how they are used and how you can get one to help pay for your wedding.
How Can I Take Out A Wedding Loan?
If you're planning a wedding, you might be surprised to find out how expensive everything is. The costs of a wedding can add up quickly. Rather than using your savings account or relying on relatives to help pay for the wedding, you might be wondering how you can take out a wedding loan.
You can apply for and receive a loan for your wedding the same way you would apply for a personal loan. You can use a bank, credit union, or online lender. Since this money, you will need to pay back, and it will have an interest as soon as you take it out, you need to make sure you research all the options before taking out a loan. Try and find the one that has the best interest and APR.
Wedding loans will also start building interest the day you take them out. This means you might not want to take it out the day you get engaged. Wait until you see how much money you need and take it out when you need to start making big wedding purchases.
Like with any kind of loan, you need to make sure you have a good credit score and a low debt-to-income ratio. If your partner has a better credit score than you, you might want to have them take out the loan since they will have better payback terms and better interest rates.
You also want to make sure you take out the smallest loan possible. Consider making a budget for the wedding and then take out a loan along those terms rather than applying for a large loan you might not need. This might encourage you to overspend, and then you have more to pay back later.
You can also file jointly, which gives you more of a chance of getting approved at favorable terms since the lender will see two people who are low risk that can pay back their loan on time.
If neither you nor your partner has good credit scores, your chance of getting approved for the loan is low. You might need to ask a relative or parent to cosign for you which increases your chance of getting a loan with favorable terms.
Is A Wedding Loan Right For Me?
This depends on you and your partner. Before taking out a loan or going into debt, you want to make sure you discuss things with one another. Determine if a loan is right for both of you since you now need to be making financial decisions together.
You also need to consider your current financial situation. If you both already have debt and are struggling financially, taking out a loan for the wedding might not be a good idea. If you are both financially well though, and just need a little extra money for the wedding, taking out a small loan might be a good choice.
Once you have determined that a loan is right for you, you can budget together and come up with a repayment plan that works for both of you.
If you aren't sure what kind of budget you can have, you might want to meet with a financial advisor together. This will allow you to create a timeline for paying back the loan. A financial advisor can also look at all your accounts and make financial plans for you both during your first few years of marriage.
This ensures that you are both on track with your money and that the wedding loan will not hinder your finances and new marriage.
Pros And Cons Of Wedding Loans
Before taking out a loan and getting financial help for your wedding, consider the pros and cons to see if it's the right choice for you. Personal loans for wedding expenses are not the right choice for everyone.
Lower Interest Rate
Many people charge all their wedding expenses to their credit card as a way to pay for the venue and other things. However, credit cards often have much higher interest rates than what you would pay on a personal loan for your wedding.
You can shop around for loans and find one that has a low-interest rate. This makes paying it back much easier than having to pay large credit card bills every month. Some banks and online lenders even offer discounts on personal loans if you sign up for payment plans or automatic payments, which can save you a little money every month.
Long Term Financing
If you aren't sure how long you will need to pay the wedding loan back, most online lenders and banks will give you a timeframe you can choose from. Personal loans can have long-term payback options anywhere from two to seven years.
This allows you to have the money you need now and then make small payments on it for several years. Keep in mind, though that paying more than the minimum payment is always a good idea if possible because it allows you to pay the loan off faster and pay less in interest.
Fast Access To Cash
Once you have been approved for a wedding loan, the lender will often put the money in your bank account as a lump sum. This means you are free to start spending the money in whatever way you want as soon as you receive it.
You can also spend the money in any way that you want. Some couples choose to spend the money on the venue or the food, while others might want to spend it on travel expenses related to the wedding. The bride can also use part of the loan to pay for her dress if she needs to.
Debt For A Year Or More
Some people don't think it's worth it to go into debt for a wedding, while others want to make sure their wedding day is perfect. Keep in mind, though, that you will be starting off life as a newly married couple in debt which can add stress to some couples if their financial wedding is not good.
Sit down as a couple and consider if taking out a loan for the wedding is the best thing to do. You should also try and take out the smallest loan possible, so you are not tempted to overspend.
You Could Have A High-Interest Rate
Depending on your and your partner's credit scores and debt-to-income ratio, you might only be offered loans that are high interest. This means you will spend more money in the long term because you are making larger payments with interest.
You might also get stuck paying off fees that come with the loan, which can make you pay much more than anticipated. Make sure you always read the fine print of every loan before signing.
Starting Off With Debt
Being married is a whole new life that will bring its own rewards and challenges. Starting off in debt might be too much pressure for some couples to handle, especially if your finances are already hard or if you need to make other big financial decisions like buying a home or having a baby.
Make sure you talk to your partner and see if they are okay with being in debt. Consider what other debt you're bringing into the marriage as well, such as car payments or student loans. It's always a good idea to be open and honest with one another.
As you can see, a wedding loan is a great way to get the funding you need for your dream wedding. It can cover basic costs related to the wedding to help you have a nice wedding, whether it be big or small.
Wedding loans are just a type of personal loan you can get from a bank or online lender. They are often given to you in a lump sum, and then you can spend it how you see fit. They are good alternatives to credit cards because they have a lower interest rate.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.