Do I have to get a wedding loan to pay for my big day?
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Planning a wedding can be exciting, but this happy day often comes at a high price.
The average reception alone costs around $ 22,500 in 2021, according to data from The Knot. In some states, such as New Jersey, couples spend an average of more than $ 53,000 on their wedding. It’s no wonder that many couples borrow money to finance their dream wedding, often in the form of credit cards or loans.
It is best not to use a personal loan to pay for your marriage. But if you must, be sure to research the best loan and loan terms. Here is what you need to know about wedding loans, as well as some money saving tips to avoid going into debt on your big day.
When a marriage loan makes sense
Couples should try to avoid getting married with new debt, if possible, especially if the bulk of that debt is incurred on one wedding day.
But taking out a marriage loan – which is a personal loan used for marriage expenses – can make sense in some situations.
- If you need to borrow money for your big day, a wedding loan will usually be more affordable than a high interest credit card, and you’ll usually have a fixed monthly payment.
- Let’s say you’ll have a more flexible budget in the near future – maybe you’re starting a new job or finally paying off the last of those student loans. In this case, taking out a personal loan without prepayment penalties may be an acceptable solution, allowing you to pay off the debt as quickly as possible.
- If you’re trying to build or improve your credit, taking out a marriage loan and paying it off on time (or sooner than expected) can help boost your credit score. Improving your credit can help you get better rates and loan terms in the future.
Taking out a marriage loan makes sense when you have a stable income and enough flexibility in your budget to meet the monthly payment and pay off the debt as quickly as possible.
You can use Credible to easily compare personal loan rates from various lenders.
How Much Money Can I Get With a Marriage Loan?
Depending on the lender you choose, your credit history, income, and special needs on the wedding day, you can borrow anywhere from a few hundred dollars to $ 100,000. Typical loan terms vary from one to seven years.
Some wedding lenders to consider
If you think a personal loan is the right choice to cover your expenses on your wedding day, consider these credible partner lenders.
Before: Good for bad credit
With a minimum credit score requirement of just 550, Avant may be a good choice if you have a limited or poor credit history.
- Loan amounts: $ 2,000 to $ 35,000
- Repayment Terms : Two to five years
Axos: good for good to excellent credit
Axos offers loans at competitive rates to people in all 50 states.
- Loan amounts: $ 5,000 to $ 35,000
- Repayment Terms : One to five years
Discover: Good for lower monthly payments
With repayment terms of up to seven years, borrowers may be able to secure lower monthly payments on their wedding loan.
- Loan amounts: $ 2,500 to $ 35,000
- Repayment Terms : Three to seven years
LendingPoint: good for low income or low credit borrowers
LendingPoint offers personal loans of up to $ 36,500 to borrowers in 48 states, with a minimum income requirement of just $ 20,000 and a credit score requirement close to the first (500 to 600 low).
- Loan amounts: $ 2,000 to $ 36,500
- Repayment Terms : Two to five years
Check out your personal loan rate options on Credible with no effect on your credit score.
Benefits of marriage loans
Taking out a marriage loan can come with a few advantages.
- It may have a lower interest rate than a credit card. If you have to decide between paying for a marriage with credit cards or a marriage loan, the loan may have a lower interest rate.
- Loan financing can be quick. Most personal loans take around five business days to fund, but you might have access to cash as early as the same day or the next business day once approved, depending on the lender.
- Couples can create credit. With an installment product such as a marriage loan, couples can build (or establish) a payment history and even increase their individual credit scores.
Disadvantages of marriage loans
There are also some drawbacks to wedding loans that you should be aware of.
- It will cost you. Personal lenders charge interest on the amount borrowed. Depending on your credit, this can cost you quite a bit. And if you miss a payment, you might have to pay late fees.
- You start your life together in debt. When it comes to marital stressors, finances are often at the top of the list. If you and your partner take out a marriage loan, you’ll start your life together with debt, which can lead to additional stress.
- Your budget will be affected. Unless you pay off your wedding loan early, the monthly payment could affect your budget for years to come. Marriage loan payments can interfere with other common goals you and your new spouse have, such as saving for a down payment on a new home or contributing to your retirement funds.
Alternatives to marriage loans
Before taking out a wedding loan, consider other ways to pay for your special day.
Using a credit card can be a good option to pay for a wedding, as long as it’s the right credit card.
Many credit card issuers offer 0% APR on purchases for a certain period of time. If you can pay off your entire balance by the end of the promotional period, you will avoid paying interest. But if you don’t pay off the balance at the end of the promotional period, you’ll start earning interest at the card’s normal rate. In addition, you generally need good to excellent credit to qualify for a 0% card.
If you use a rewards credit card, you can even earn points, cash back, or miles on those big wedding or honeymoon purchases. But it’s important to note that many wedding vendors charge a credit card processing fee, typically between 2% and 3%, which can negate any savings or rewards you earn.
Plan a modest wedding
Just because a wedding costs on average tens of thousands of dollars doesn’t mean yours has to cost the same.
Get creative and find ways to cut costs to make your big day more affordable.
- Find a free venue in your area to hold your ceremony, such as a park or even a family member’s home.
- Make handmade favors or buy a dress at a trunk sale.
- Consider inviting fewer guests.
It can be tempting to get carried away by the magic of wedding planning, but it often leads to overspending. Think about what’s really important to you and your partner, and where you’re willing to give in.
High yield savings account and longer commitment
As keen on getting married as you are, consider a longer engagement while putting money aside in a high-yield savings account or other savings vehicle to cover wedding expenses without going into debt.
A longer commitment will allow you to earn more interest on your savings. You’ll also have more time to interview caterers, photographers, and other vendors, find great deals, and even reconsider your priorities on your wedding day.
Tips to save for your wedding
- Automate the process. The best way to achieve any savings goal is to prepare for success. For many couples, this means automatically moving money into savings each month, where it can grow and earn interest.
- Establish a budget. Sit down and figure out what you can realistically afford to spend on your wedding day. Consider what this means for your savings efforts today, as well as potential monthly payments later. Then stick to that budget no matter what.
- Pick your priorities. Wedding planning is a great âneeds versus wantsâ exercise. Spend time alone and with your partner thinking about what you absolutely must have for your wedding day, and what would just be nice to have. You can find places to cut costs in the process.
- Take your time. The longer you save for a wedding, the more money you can save and the more interest you can increase. A longer engagement also allows you to take advantage of off-season sales, find great deals, and tinker with some aspects of your big day.
- Take the tour if you are borrowing. Whether you are considering taking out a wedding loan or using a credit card to cover wedding expenses, take the time to compare your options.
If you decide to get a personal loan to help cover your wedding expenses, use Credible to compare personal loan rates in minutes.