What are Wedding Loans?
Wedding loans are personal loans that are used towards the purchase of all things and services you need for your wedding day. You can cover any costs that come along with a wedding day, night, or even the honeymoon.
Usually, personal unsecured loans are most commonly used for just about any personal need that you have. The loan terms are usually no more than five years to pay back, while the interest rates will depend on the amount of the loan, the institution you’re borrowing from, and your credit score and history. They generally run between 5% and 35% from lenders. However, there are secured options that require you to put a vehicle or home as collateral on the loan.
You are able to apply for a personal loan for your wedding at any financial institution that is offering personal loans. This can be a bank, credit union, online financial institute and others.
According to The Knot, a popular wedding website, an average wedding can cost around $34,000 in 2019, with costs rising each year.
Wedding Loans Alternatives
There are wedding loan alternatives to using a wedding loan or personal loan to finance your wedding. Consider the alternatives you have available.
Use Your Savings
Commonly, some couples have dedicated savings for their wedding. However, this might take longer than someone would like. You may also not have much extra money to work with. You may not be able to get married during your originally planned wedding date.
0% APR Credit Cards
These are an alternative for many people. If you have cards that have high enough limits, then you may feel tempted to put a lot of charges for the wedding on them. It can be rough long-term to pay these cards down, though. This is why having 0% APR on the credit card should be used to save more money.
Rewards Credit Cards
Using the credit cards that offer rewards on them can pay you back, while also paying for the wedding. These credit cards are always recommended to be used because they provide cashback, travel perks (great for the honeymoon), or other rewards that can be used. This is all they can provide though, so consider the debt you’ll end up receiving.
Cut Down Expenses
The expenses and costs of the wedding may be able to be cut down. Cutting corners where you can, or compromising on more affordable items for the wedding is common with some couples. You can reduce the number of guests to pay for, or by reducing the number of individuals in the bridal party. Skipping the wedding planner, or choosing a different caterer with a more affordable price are also common ideas.
Get a HELOC or Home Equity Line of Credit
Obtain a HELOC from the mortgage that you currently have or if you own your home, you may consider taking out a line to use for the wedding. However, if you don’t pay the loan back, your home can be taken. This is important to remember when using a home equity line of credit.
How to Get a Wedding Loan
Step 1: Check Your Credit Score
Know where you stand when it comes to your score and history. Find out the pre-qualifications with the lenders you’re looking at. Make sure you meet the minimum credit requirement for that lender.
Step 2: Get Pre Qualified
Pre-apply to a few lenders at a time to get a pre-qualification with them. This will provide you with an idea of what you might need to work on, if not qualified or if you are, how much they’ll lend you based on your credit and income.
Step 3: Compare Wedding Loan Offers
When looking for lenders, take a few that you like the most and compare their rates, terms, and additional information to find out which would be a better choice. The best wedding loans are easy to spot when you compare the offers side by side.
Step 4: Choose a Lender and Complete an Application
Now that you’ve compared the wedding loan offers and lenders, you can choose which to work with. Once you do this, you can formally apply for a wedding loan. Fill out the application completely to avoid disruptions in the process.
Step 5: Get Your Money
Once you’ve applied, you’re approved, and everything is signed; you can then get your money. This is usually sent directly to your bank account unless you choose to pick up or get mailed a check for the funds.
What You Can Finance With a Wedding Loan
Your wedding loan was taken out to pay for the costs of the wedding you’re having. These items can include anything on this list and other things not mentioned but specific to the wedding.
The ceremony is one of the biggest parts of a wedding. While the reception is fun, the marriage takes place during the ceremony. This is usually a price to have someone marry you two, but also where you’re having the ceremony and the extras that go into this. Make sure to have a budget for this part of the wedding.
There are many things that can be financed with a wedding loan. Beauty and attire are some of the biggest parts of a wedding. So, naturally, you can spend the loan on these items. The gifts and favors are also something that can come with a hefty price tag especially if you have a large bridal party or many guests.
What is there not to love when you are feeding everyone plates of food and appetizers. You can also expect to purchase a large cake to share with everyone, along with the alcohol and drinks for the day (and well into the evening for some). The catering cost can go up to $8,000 for some. The decisions you make during this process can make the cost of food range.
The reception has to be held somewhere, so it is important to have the venue set up nicely. The average wedding venue can go up to $11,000 for a space. The flowers, decor, and other pieces of the wedding can go together nicely in the venue.
Within this space, you will have a dance floor that is installed, along with the right music playing. This is an extra cost. Capture every moment of this special day when you pay for the services of a photographer who can take photos and videos of the special day.
Some extras that you also have to consider in the average wedding costs in 2020 are smaller including the invitations and other paper products, a wedding planner if you choose to use one, the wedding rings that you both will wear, along with the transportation that you use to get from one place to the next.
It is important to note that a wedding loan is a personal loan. This means if you call the wedding off, but still want to use the money you may be able to. Some lenders have restrictions on what you can and cannot purchase with the loan but this should be looked into with the specific lender.