Should You Get A Wedding Loan in 2024?
Updated: December 28, 2023
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A wedding is usually not a cheap event for the people involved. However, it’s a life-altering milestone. That’s why many couples take the leap in spending a huge amount for this occasion.
Various factors affect the total cost of a wedding, including location, number of guests and the couple’s choices. A considerable chunk of the budget often goes to the venue. On average, a wedding venue costs $10,700.
The average rate for a photographer is $2,500. The bride’s wedding dress can also be pricey, costing an average of $1,800. Other expenses include the groom’s attire, cake, hair and makeup, floral arrangements and catering services. Choosing to go on a honeymoon can increase expenses.
The average total cost of a wedding in 2021 was $34,000. Around $28,000 was allocated to the ceremony and/or reception. Couples typically spent $266 per guest, with an average guest list of 105.
For some couples, one way of covering the hefty costs of a wedding is to take out a wedding loan. It’s a personal loan for weddings. Wedding loans are not a separate category of loan. That means the loan application process and the repayment terms are based on the rules and requirements of lenders that provide personal loans.
Before applying for a personal loan for your wedding, it’s essential to understand your options. Learn about the potential drawbacks that a personal loan carries. Be sure you understand all the conditions it entails.
How Does a Wedding Loan Work?
To understand how a wedding loan works, it’s important to know what a personal loan is. You can use a personal loan for various reasons. One of them is to fund a wedding.
Personal loans are typically unsecured, which means there’s no collateral required. However, they accumulate interest. Based on recent data from the Federal Reserve, the average annual percentage rate (APR) for a 24-month personal loan is 8.73%, but rates vary per lender. Repayment terms, maximum loan amount and other associated fees also differ depending on the lender.
You can decide whether to use a wedding loan to cover all or some of your wedding expenses. That’s why it’s smart to calculate your costs first. You can start by categorizing your expenses and determining which requires more funding. An online wedding expense calculator can also help you understand how much you may need.
Is a Wedding Loan Right for You?
A wedding loan can be a good idea. However, it may not be suitable for every couple. Before taking out a personal loan for your wedding, ensure you understand the fees, terms, funding time, interests and possible impact on your credit score.
Pros & Cons of Getting a Wedding Loan
Couples preparing for their wedding can find a personal loan helpful, especially for covering large expenses. However, it may also have drawbacks as it can strain your financial situation and your marriage.
Before you take out a personal loan for your wedding, ensure you understand the benefits and risks.
Advantages of Getting a Wedding Loan
A personal loan is suitable for a couple preparing for a wedding if its advantages outweigh the drawbacks. Below are some of the benefits of taking out a wedding loan.
Disadvantages of Getting a Wedding Loan
Wedding loans aren’t for every couple. In some cases, they can lead to financial issues. Here are some disadvantages you need to look out for.
Steps to Getting a Wedding Loan
Requirements, fees and terms may vary depending on the lender. There may also be some differences in the application process, including qualification requirements and processes. To help you get started, here are some of the most common steps for wedding loan applications.
Calculate how much you need
The first thing you need to do is determine how much money you’ll have to borrow. Calculate all your expenses. Determine whether you’ll need a loan to cover all your wedding costs or only some of them.
Assess your qualifications
Before applying for a loan, check if you’re eligible based on lender requirements. Typically, lenders look at credit scores. Having a good to excellent credit score increases your chances of getting approved for a loan.
Your debt-to-income ratio (DTI) may also be used to determine if you meet lenders’ income requirements. It shows lenders how much of your income is already going to debt repayment.
Get prequalified from various lenders
Some lenders may offer prequalification. This means your financial profile fits the general profile of borrowers who have been approved for loans in the past. This typically only involves a soft credit check.
Compare loan offers
It helps to shop around when looking for the best loan offers. You can take advantage of lenders offering prequalification with only a soft credit check. Determine which offers the best rates to help you save money in the long run.
Submit an application
Once you’ve chosen a lender and loan offer, you can proceed with the application process. Complete the necessary paperwork and submit all requirements. Make sure you review the terms and read the fine print.
Wait for approval and funds
After submitting your documents, you only need to wait for the lender to finish reviewing your application. The funding time after the loan approval depends on the lender.
Frequently Asked Questions About Wedding Loans
Taking on a personal loan for a wedding comes with pros and cons. Below are some of the most commonly asked questions to help you better understand how wedding loans work and determine whether taking one is the right step for you.
Since a wedding loan is a personal loan, anyone eligible to get a personal loan can take out a wedding loan. Eligibility requirements vary per lender. In most cases, a good credit score and DTI ratio are necessary.
It depends on the lender. Some lenders allow borrowers to complete the loan application process online, while others require a personal appearance.
The approval process for a wedding loan depends on the lender. For instance, lenders who accept online applications tend to have a shorter processing time. In most cases, the whole process from application to approval may take a few days.
The necessary documents may vary per lender. Typically, it includes a completed application form, proof of identity, proof of income and proof of residency.
Default means failure to pay the lender within the agreed-upon term. Depending on the lender and loan agreement, a personal loan may be considered in default if the borrower’s payment is late by a certain number of days.
If you default on your wedding loan, you may end up with higher debt. Defaulting may also negatively impact your credit score. The lender may even take you to court and seek repayment.
sources
- Federal Reserve System. "Consumer Credit - G.19." Accessed July 31, 2022.
- The Knot. "The Knot 2021 Real Weddings Study." Accessed July 31, 2022.
The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.
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