Wedding Loans: When it’s a good Idea to say “I do” to a loan for your wedding
What you need to know about wedding loans, interest rates and other alternatives for your dream wedding!
Flowers, rings, DJ, photographer, venue: The list when preparing for a dream wedding always seems to go on and on. And with that, also the funds required to pay for it all. Anyone who’s been through the stressful process of planning a wedding can probably tell you the same thing: weddings require time, patience, and a significant amount of money.
For some time now, a popular solution to these costly events has been wedding loan. But what are they and how do they work? Here are the main things people are wondering about wedding loans and a few tips on how to best approach this big decision before your big day!
Q: What exactly is a wedding loan?
A: Wedding loans are often personal loans people take in order to cover the costs of their wedding. They are a good way to avoid revolving credit card debt, but just like every other loan, it’s important for you to do your research and understand how much you’ll be paying in interest, and how long it will take you to pay it off.
Q: Should I take a personal loan instead?
A: Technically, a wedding loan is often an unsecured personal loan. It is unsecured because, as you may have read in our previous articles, you are not providing any collateral (such as a car or a house) and it may represent a higher risk for the lender.
Because unsecured loans can represent a higher risk, it’s not uncommon to see higher interest rates, which is why it’s important for you to do your research and find the best lending institution that best accommodates your credit score, financial background, and overall needs.
Q: Can I take out a wedding loan if I have a bad credit score?
A: If both you and your spouse-to-be have a not-so-good credit history, it is still possible to apply — and even qualify!– for a personal loan to pay for your wedding. But be careful that you’re not over-extending. There’s a reason your credit history is less than stellar; don’t make it worse because you feel obligated to spend too much on the nuptials. Set a budget and stick to it.
If you’re thinking about taking out a personal or wedding loan in the near future, you should consider taking a few easy steps to improve your score before starting loan applications. Click here to find out how you can increase your credit score and how a few points could make a big difference!
Q: What’s the average interest rate on a wedding loan?
A: Much like every other loan and credit card, the interest rate and repayment terms on a personal loan that you can use for your wedding depend on your financial situation, income, credit score, and financial history. According to valuepenguin.com, the average interest rate could go from 10% for those with an Excellent credit score (from 720 to 850), to much higher for consumers with a Poor credit score (from 300 to 639).
In addition to your financial status, keep in mind that different lenders may offer different discounts and alternatives for applicants, so shopping around and exercising your due diligence could make a huge difference in the long term.
Q: Are there other alternatives to wedding loans?
A: Absolutely! A few months ago we shared an article on budgeting for your wedding and kissing stress goodbye. In a nutshell, the article explains that even the simplest and smallest weddings cost money, which is why truly understanding what you can spend instead of what you want to spend is key. If you take your budget seriously and stick to it, a wedding loan might not even be necessary!
Q: What should I do if I’m ready to take out a personal loan for my wedding?
A: Making a decision on whether to take out a loan or not is often times the hardest part, so congratulations! You’ve taken the first step.
Now in order to take out a loan, a good idea is to know how much money you are hoping to get and have a good understanding of what your credit report looks like. By doing this, you’ll know what to expect when starting the application process and even be able to negotiate better.
LendingPoint is a personal loan provider specializing in NearPrime consumers. Typically, NearPrime consumers are people with credit scores in the 600s. If this is you, we’d love to talk to you about how we might be able to help you meet your financial goals. We offer loans from $2,000 to $25,000, all with fixed payments and simple interest.