If you are in the market for a wedding loan, chances are you recently proposed or got proposed to. In that case, congratulations! Weddings are one of the most exciting and beautiful events in an individual’s life. At the same time, they can be gravely expensive, if you are not careful. If you are looking for a Cinderella-esque wedding, you will need some financial backing. To top of it off, today, many venues and other wedding necessities require a significant downpayment that, unless you are bringing in money, it can be challenging to finance.
Now, that’s why you are here – to learn more about how to finance a wedding. Fortunately, there are these lovely financial options known as wedding loans. In today’s article we are going to provide you with detailed, comprehensive information behind these financing options, so you can better prepare yourself for your life event. We will also cover some tips and tricks along the way to make your special day even better.
Let’s dive in!
What is a wedding loan?
We can probably all agree that it would be a lot easier if there was either a money tree when it came to financing a wedding. The truth is, this is a very significant life event– and it can get quite expensive. With that being said, a wedding loan is a more common term used to describe a personal loan. However, by simply swapping some words around, it becomes a more appealing option for consumers. In fact, many times, institutions will mention that they have good offers for “wedding loans” – when in fact, they have good offers on a personal loan, which can be used for any particular reason or occasion.
If you are not familiar, a personal loan is simply an unsecured loan in which an individual is required to pay back the loan in the form of installments. For example, if you open a personal loan for $20,000, perhaps for a wedding or a car, it’s expected that you will pay the financial institution back a specific amount of money each month until the entire loan is paid in full.
What’s important to note is that wedding loans do come with interest rates. Depending on the company and the type of loan, the interest rate may come as a fixed interest rate or a variable interest rate. Evidently, the ultimate goal of opening any loan, regardless if there is a wedding involved, is to pay off the loan before the interest can kick in. However, we know that’s not always the case. This is why it’s incredibly important to become educated on how wedding loans work and what the opportunity costs are.
Who should open a wedding loan?
With some background information on wedding loans, it’s also important to know that wedding loans are not optimal for everyone. If we can be honest, wedding loans are best for couples that have been actively saving and budgeting money for their big day. Reason being, as we will explain in a bit, it can be challenging to secure a great wedding loan with good interest rates. However, we understand that sometimes, finances might not work like that for you. Also, there will be a time when, whether it’s the florist, cake decorator, or even the venue itself, if you don’t book within 24 hours, you will lose the opportunity to reserve your slot.
With that being said, if you are in a financial situation where it’s difficult to put down a cash deposit or perhaps parents and relatives cannot help with specific transactions – a wedding loan can be quite helpful. It is absolutely critical though to be aware if you decide to open a wedding loan, that you are fully responsible for paying the entire loan back. So, be careful when you start ordering and purchasing items for your wedding. Otherwise, once you tie the knot, you might have years upon years of debt.
What are the advantages of a wedding loan?
When it comes to a traditional wedding loan, there are some pretty significant advantages. For one, these financial options open up an opportunity for couples that otherwise cannot afford to purchase certain things for their wedding. For example, if you are looking to secure a very special venue for your wedding; however, it’s slightly outside of your budget, a personal loan can help you achieve that dream.
Furthermore, almost any wedding loan can be applied for online, making it a favorable option for many couples. If you go this route, you could actually see the money in your bank account within days after you get an approval. This is great for those quick, last-minute purchases that you might need to make, or for those entertainment options that are booking quickly.
Additionally, wedding loans are not only a great way for a couple to establish or expand their credit line, it can and will improve their credit score if paid off on-time. One reason why couples prefer wedding loans over other financial options is that these all come at lower interest rates than other financial options, such as a traditional credit card.
What are the disadvantages of a wedding loan?
As with many things in life, as with the advantages, there are disadvantages. The thing with wedding loans is that they are designed to tempt couples to overspend. As a result, these couples are buried deep in debt after their wedding, causing a wealth of other financial problems. Additionally, these types of loans almost always come with an origination fee, which many couples are not prepared for. So, when opening up a loan, be sure to ask what their fee might be.
How to Apply?
What makes these loans such a favorable option for couples is how easy they are to apply for. Typically, loans require an individual to visit a local financial institution and going through extensive paperwork. It’s the exact opposite when it comes to online wedding loans. All that you have to do is visit a company’s website, provide the right information according to their forms, and then within 24-48, you should hear some information regarding the process. However, to avoid any scams or unbeneficial loans, it is not a bad idea to try to visit a lender in person. This way, you can ask all of the questions you might have and have an interpersonal experience to ensure trust and security.
Tips for Finding the Best Wedding Loan
The first tip that we can offer for finding the best wedding loan is to do your proper research. You should never pick the first company or bank that you stumble across. Take the quality time and look at each company, what they have to offer, and what previous couples are saying about their experience. Do this for any company that you are considering and you might be surprised to learn some unexpected facts or insights about the company.
- Credit Score
While you can do your research all day for different companies, the biggest deciding factor as to what type of wedding loan you can obtain will come down to your credit score. It’s absolutely vital that you plan accordingly and take action to improve your credit score. The higher your credit score, the better the loan will be. It’s highly advised from many financial experts to knock down as much debt as possible prior to opening a wedding loan as it will make the process much easier and allow for better financing options.
- Shorter Terms
Once your credit score is in place and you have done your proper research, you can start to get more specific as to what types of companies you wish to open a loan with. Now, when doing your research and looking at what types of loans a company will offer you, look at the value of a shorter-term loan. If a bank or institution is not offering a short-term loan, you may want to look for a different provider. The best personal loans come in the form of the short term loans.
- Loan Costs and Payments
If you are passionate about securing the best type of personal loan for your wedding, pay close attention to any loan costs and payments that the loan provider has on their website. If you are not finding any specifics on this, be sure to ask a representative in person or on the phone. Before signing any documents or contracts, you should know precisely how much the entire loan costs, including interest rates and other fees. Additionally, you should be aware of the anticipated monthly payments, and how they are impacted by interest rates.
- Interest Rates
The last tip that we have for finding the best wedding loan is highlight the companies who are offering the best interest rates. If the company offers both a variable or fixed rate option, it has been discussed that a variable option tends to offer couples the best opportunity when it comes to a wedding loan. Reason being, these loans will be offered with the best possible interest rate; however, it’s important to note that, if you don’t pay it off in the agreed amount of time, the loan’s rates will spike.
Other Financial Options
- Credit Cards
If you do not want to sign-up for the risk of a wedding loan, another option that couples can try is the credit card path. Evidently, there are benefits in using credit cards as well as disadvantages. Here, you might not face specific fines or fee, and, at the same time, you are not giving yourself a specific timeline for paying the loan back. The biggest downfall and reason behind why people are flocking towards wedding loans instead is because of the higher interest rate on credit cards.
- Secured Loan
As we discussed above, wedding loans are considered an unsecured personal loan. The other option that you may consider is a secured personal loan. In our experience, we highly advise again such loans as they are very risky. Here, couples will be required to tie a specific personal asset into the loan. So, should they default and unable to pay the loan, the bank will possess that asset. If you are not wanting to put your home or car on the table – stay away from these loans.
- Save Up
If you are finding these financial options that involve lending to be challenging or difficult given your credit score or overall budgeting concerns, it may just be best to stick to saving as much money as possible. There have been thousands of couples who set aside a small chunk of money each paycheck in their savings account to help fund their wedding. The best part about this method is, the more money you can compound, the more interest you can accrue in a savings account.
Verdict: Are They Worth It?
At the end of the day, most couples are probably asking: are wedding loans worth it? The truth of the matter is, these loans can be incredibly beneficial, especially for those who are finding it challenging to save up enough for their special day but have the budgeting skills to handle monthly payments. Whether it’s securing the venue before it sells out or purchasing the florist who designs picturesque flower bouquets – a wedding loan can ensure that your wedding is precisely like how you imagined.
With that, we highly advise anyone in the market for a wedding loan to take their time during the process, do the necessary research and really focus on improving their credit score. Both of these can make the world-of-a-difference when it comes to paying back for a wedding.
Now, before we go, there are so many different resources available today to help lovebirds, such as yourself. Take the time to explore our website and look at all of the resources that we have available to you. In fact, you might be able to find a certain lender on our website that speaks to your needs.