While the national average cost of a wedding is £33,931, it is important to remember that it is possible to have an amazing wedding on any budget. The keys are saving, setting priorities and sticking to the number you start with. But we are not saying it is always easy to do. Ideally, you should avoid using credit to pay for your wedding. However, there are cases when taking out a wedding loan may make sense for your circumstances. Are wedding loans a good idea?
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Also, if you are willing to accept the risks of taking out a loan for a wedding in exchange for getting the wedding day you want, that is your choice. Before you make that choice, however, it is important that you learn more about wedding loans. Discover how they work and the major pros and cons of starting your married life in debt.
Are Wedding Loans a Good Idea? What are Wedding Loans?
First things first: There is no such thing as a “wedding loan.” You can’t just walk into a bank and request a wedding loan. What we are talking about here is using a personal loan for the purpose of funding your wedding. Most financial advisers would tell you to stop here and not pursue wedding loans. Taking out a personal loan is kind of a last-ditch effort. The problem with personal loans is that most often people are taking them out because they are trying to spend cash that they simply do not have.
I would also lump in credit card spending here, because I think a lot of people pay for wedding-related things with a credit card. And they may or may not have the cash to pay it off in full. Personal loans are good to avoid spiralling into credit card debt. But maybe not as a quick fix for a down payment on your venue. That being said, taking out a wedding loan is not unheard of, and there are a few ways to go about getting a personal loan to help cover wedding costs.
The Pros and Cons of Wedding Loans
Can you take out a loan for your wedding? As long as you can qualify for the loan, the answer is yes. The real question is: should you take out a personal loan for your wedding? Here are the main pros and cons to consider.
Pros of Loans
- They are a convenient way to get money. As you start planning your wedding, you will discover that your venue and your vendors expect upfront deposits. This is in order to book their space and services. These costs can add up quickly. Especially when you add your wedding dress and accessories into the mix. If you do not have a huge chunk of money sitting around in your savings account, a marriage loan can give you the cash you need to cover your deposits.
- They are easy to get. In many cases, you can apply for your wedding loan online in a matter of minutes. This is once you get your financial documents in order. Your bank or loan provider will review your application, and, if you are approved, will deposit your loan amount directly into your bank account.
- You will get your money quickly. Most lenders can review your application, approve it, and deposit your loan amount in a matter of days. Some lenders even promise loan funding within 24 hours.
- Better interest rates than credit cards. If you have a good credit score and a strong credit history, chances are that you can get a wedding loan with an interest rate lower than your credit cards.
- Some loans don’t charge for prepayments. Some loans will allow you to pay off your loan early without any penalty fees, which can save you on interest costs. If you plan on paying off your loan with cash gifts from wedding guests, or if parents or other family members have offered to help fund your big day, you may not have to pay any interest at all. Double-check the language of your loan to make sure prepayments are allowed.
- You will improve your credit score. Couples looking to build or improve their credit can boost their score by successfully paying their marriage loan. Make sure not to miss payments or make late payments. A higher credit score will make it easier to get loans in the future and keep your interest rates low.
Cons for Wedding Loans
- Interest rates. By taking out a loan for your wedding, you will be paying interest on the loan for years. For example, if you take out a 5 year loan for £15,000 at a 10% interest rate, you will end up paying over £4,000 in interest over the course of the loan. Is splurging for your wedding day really worth an extra £4,000.
- You will be starting out your marriage in debt. Money troubles are a common cause of relationship stress. Do you want to start off this new and exciting chapter of your life with a monthly loan payment for the next three or five years?
- Existing loans make it more difficult to qualify for new loans. Are you thinking of buying a new car or even a new home after your wedding? When a bank considers giving you a loan, they will look at your existing loans to determine if you can afford the new loan. If you have a lot of existing loans to determine if you can afford the new loan. If you have a lot of existing loans, the bank may not give you a loan for the amount you want, or they may deny your loan altogether.
- They could make you spend more. Getting the money for your wedding loan in your bank account could make you feel flush with cash. You may feel more comfortable upgrading your floral arrangements, choosing that dress that is out of budget or inviting a few more people to your wedding. All of these upgrades add up.
