Weddings mark and celebrate the union of two people in love. They are a time of joy and significance. However, weddings are becoming increasingly expensive, with the average wedding costing around $30,000.
A personal loan can help you pay for the venue, entertainment, attire, and any other relevant costs. In this guide, we go over the various ways that taking out a loan can benefit couples who are planning a wedding.
The financial landscape of modern weddings
Here is a wedding budget breakdown with estimated average costs of common wedding components.
- Venue: The venue depends on guest count, but can easily go above $10,000.
- Attire: Wedding dresses, groom’s attire, and other outfits can cost over $2,000.
- Catering: The average price of catering is about $75 per person.
- Drinks: If you want to provide alcohol in the form of a wedding bar, you might need to add another $1,000 to the budget.
- Wedding cake: The average wedding cake goes for around $500. If you want a fancier one, it can cost over $1,000.
- Entertainment: Bands and other types of entertainment can cost a few thousand dollars depending on what you want.
- Photographer: A photographer or videographer can cost around $2,000.
While the average wedding cost is around $30,000, it is of course your prerogative to stick with a smaller-scale wedding that doesn’t drain your finances as much. The modern wedding industry can be challenging and expensive to navigate, so make sure you consider your options to see what best aligns with both your goals and budget.
Depending on how you want to personalize your wedding, your target budget can fluctuate greatly. Personalization can add extra flair, glamor, and meaning to your wedding ceremony, but it also means more expenses.
If you want to incorporate special themes, destinations, entertainment, and other personalization options, you may want to consider taking out a personal loan. A personal loan can help you better plan for a personalized wedding experience.
Here are some ways a loan can help you meet the target budget for personalized wedding details:
- Dream venue
- Special themes
- Storytelling and style
- Unique decor
- Custom invitations
- Live music
- Signature cocktails and memorable food
- Wedding gifts and favors
- Interactive experiences (e.g. a photo booth)
- And more!
Wedding financing options
Other than obtaining a personal loan, you can also work toward wedding financing through other methods. Here are some of the common methods of financing a wedding.
Many couples save up in their bank accounts for a period of time so that they can comfortably afford their wedding plan. Since this means that there is no debt burden, dipping directly into personal savings is preferable for many people.
Monetary gifts from family and friends
Family and even friends might be willing to help you cover specific wedding expenses. Some couples also reach out to photographers or other professionals they are friendly with to see if they can receive a discount.
Using credit card accounts is a convenient and quick way to fund a wedding. However, it is important to note the potential pitfalls associated with using credit cards. Wedding bills are often expensive, making it difficult for you to pay down your credit card balance in a timely manner. This often results in interest accruing to the point where the high credit card interest rates can really hurt.
Dedicated wedding loans
Some financial institutions and lenders will offer loans specifically meant to finance weddings. Compared to standard personal loans, the terms and requirements are different, so make sure you carefully read the wedding loan agreement before signing.
Understanding personal loans for weddings
Personal loans for weddings are usually unsecured loans that grant you a lump sum amount that is directly disbursed into your bank account. These funds can then be used for various wedding expenses, such as the venue and catering.
Here are some of the main benefits of using personal loans for wedding expenses.
No collateral requirement
Generally, personal loans for weddings don’t require you to put up any assets as collateral. This is an advantage for couples who don’t want to risk their assets, such as property or vehicles.
Your lender will designate the repayment terms, and you may be able to negotiate even more favorable terms. Since weddings can be rather expensive, it is common for the loan tenure to last up to 7 years. This gives you and your partner plenty of time to save up and comfortably repay the loan.
Competitive interest rates
If you or your partner have good credit, you can receive competitive interest rates on your personal loan. This helps you minimize the cost of borrowing and the financial strain.
Loan purpose flexibility
The loan funds that you take out in the form of a personal loan can be flexibly used. Whether that’s for the wedding venue, the reception, or a live singer, you can enjoy the versatility offered by personal loans.
To qualify for a personal loan with favorable terms, it is ideal to have a good or excellent credit score. Solid financial stability in the form of stable income and employment can also help you meet the eligibility requirements of lenders.
If you have poor creditworthiness or insufficient financial stability, it can be harder to find a suitable loan. However, with a wide number of lenders available, it is still possible to receive a manageable loan offer with bad credit.
Benefits of using personal loans for wedding costs
Many potential benefits come with using personal loans to cover your wedding expenses. Here are some of the advantages that personal loans can offer.
Streamline multiple wedding expenses into a single monthly payment
If you have many sources of debt and expenses for your wedding, it can be overly complex to pay. A personal loan allows you to consolidate the rest of your expenses and balances into a single, manageable one. This convenience is a great advantage of using personal loans.
Design a dream wedding aligning with the couple’s vision
A personal loan can greatly broaden the possibilities of your wedding. The funds can help you choose your dream venue, destination, theme, attire, and more. Weddings are a long-term goal for many couples, and a personal loan can facilitate that goal, bridging any financial gaps between you and your personalized wedding experience.
Avoid draining your savings
Taking out a personal loan to pay for the wedding means that you don’t need to deplete your savings. This enables you to better deal with any other types of expenses after marriage. For example, couples might want to take out a wedding personal loan so that they can keep their savings for a honeymoon, a mortgage, and/or raising a child.
Fund the wedding more quickly compared to other loans
Many personal loan lenders are able to disburse your approved loan amount within three business days, or even on the day of your approval. The fast funding process may be an advantage for couples who need rapid financing.
What to consider before choosing a personal loan for wedding expenses
Before you take out a personal loan, it’s important to consider key points related to loan debt and requirements. Let’s go over the main factors you should keep in mind before obtaining a personal loan for wedding expenses.
The full cost of the loan
Loans aren’t money you can borrow for free. There are interest rates, fees, and potential penalties you might have to pay. Before accepting any loan offer, it is critical that you are aware of the full cost of borrowing.
Looking at the annual percentage rate (APR) is the quickest and simplest way to understand the full cost of the loan. The APR is a percentage of your loan amount that expresses your total cost of borrowing in a year. It accounts for costs such as your interest rate and application fees.
The loan terms and conditions
Understanding the loan terms doesn’t only involve knowing the interest rate. You should be aware of the requirements of the loan. If you don’t meet the repayment requirements, your loan might go into default and be sent to collections.
A defaulted loan can heavily damage your credit score, which hurts your ability to receive credit extensions and loans in the future. This can be inconvenient for married couples who are looking to take out a mortgage on a house.
The couple’s financial capability to repay the loan
Assess your shared ability to repay the loan. Take into account your expected monthly income, expenses, and other factors that influence how comfortably you can repay the loan. In some cases, you might need to cut discretionary expenses and make other changes to accommodate the loan repayment plan. It is a good idea to review your financial capability together before you take out a personal loan for the wedding.
The long-term implications of starting married life with debt
Before obtaining a wedding loan, consider the implications of taking on a debt burden at the start of your married life. This could be an issue for some couples, or a source of stress in the long run. It’s advisable to thoroughly discuss the option of getting a personal loan to finance your wedding, as well as potential alternatives, to reach an agreement.
Practical tips for wedding budgeting
Every couple has their own ideal budget and financial circumstances. Here are some common strategies that you can consider implementing for wedding budgeting.
Prioritize wedding expenses
Defining your priorities can help you better budget for your wedding. You may want to allocate most of your budget toward what you find the most meaningful and essential. This means you can use less of your budget for the lower-priority elements of the wedding.
Identify areas for savings
Consider ways you can reduce your expenditures and increase your savings. Ask if you really want or need a wedding component, or if it’s on your checklist just because it was advertised to you.
Research competitive vendors
It’s important to be aware of the most up-to-date trends and prices of hosting a wedding. Knowing the industry costs and researching vendor and venue options can help you minimize wedding expenses. Some vendors offer quality goods and services that come at a discount if it is for a wedding.
Set a realistic budget
Even though personal loans often allow you to greatly go above your current budget, that may not be an option that you or your partner find comfortable. Make sure that you choose a realistic budget so that you don’t sacrifice your financial stability. Know how much you can afford and your borrowing capacity.
Consider DIY approaches
Some wedding components can benefit from a DIY approach. This can even add a unique personalized touch to your wedding experience, which many couples find lovely.
Negotiate with vendors for better deals
Many vendors are happy to give discounts for wedding-related, large-scale goods and services. Before you commit to a vendor, you may want to try negotiating for better deals and wedding discounts.
At the end of the day, it’s important for a couple to be well-informed before taking on a personal loan for wedding expenses. Personal loans are a fantastic way to finance a dream wedding that is otherwise out of reach.
However, it is essential to carefully assess the various benefits and drawbacks. Your wedding aspirations should align with practical financial considerations. For example, will you and your partner be able to manage the loan repayment plan comfortably, or will the debt burden pose a significant financial and emotional strain?
A wedding doesn’t need heaps of financing to feel magical and personalized. Still, a personal loan can certainly enable you and your betrothed to attain that dream wedding and afford that dazzling venue. Make the choice that suits your needs and goals best.
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