How Much Are We Talking About
According to a recent LendEDU wedding debt survey, one-third of respondents said they went into some sort of debt to pay for their big dayan average of nearly $12,000. The survey found people mostly borrowed through credit cards and personal loans.
Whats more, nearly 40% of respondents said they regret taking on the debt and estimated it will take them about five years to pay off.
Wedding debt is becoming so common that online lenders reported they issued up to four times as many loans to engaged couples in 2019 than they had the year before. This makes sense given the increasing costs of weddings paired with societys mounting debt.
Pay The Deposit On A Credit Card
At the very least, when it comes to funding your wedding, its worth putting the deposit on your credit card. This way, you will get protection under Section 75 of the Consumer Credit Act.
Protection under Section 75 applies if you pay for goods or services costing more than £100 and up to £30,000, and you get this even if you only put the deposit on your plastic.
What Are Wedding Loans
First things first: There’s no such thing as a “wedding loan.” You can’t just walk into a bank and request a wedding loan. What we’re talking about here is using a personal loan for the purpose of funding your wedding. Most financial advisers would tell you to stop here and not pursue wedding loans. “Taking out a personal loan is kind of a last-ditch effort,” says Lauren Lyons Cole, certified financial planner and personal finance contributor for financial-planning website Mainstreet.com. “The problem with personal loans is that most often people are taking them out because they’re trying to spend cash they don’t have. I would also lump in credit card spending here, because I think a lot of people pay for wedding-related things with a credit card and they may or may not have the cash to pay it off in full.” Personal loans are good to avoid spiraling into credit card debt, but maybe not as a quick fix for a down payment on your venue. That being said, taking out wedding loans isn’t unheard of, and there are a few ways to go about getting a personal loan to help cover wedding costs.
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Other Options To Consider
Be forewarned: Despite your best efforts, you may get turned down for a personal loan for wedding expenses.
If this happens, dont panic. A couple alternatives to consider are applying for a home equity loan or HELOCassuming you own a home with enough accrued equity. Or, you could opt for a cash-out refinance of your mortgage.
Another alternative is to ask friends or relatives for a personal loan. They may be more willing to help if you explain that the funds are for your wedding, Bakke says.
The experts advise against using to fund your big day. Thats because credit cards often charge the highest rates of interest if you cant pay off your balance in full each month.
If you cant borrow the money you desire, try lowering your wedding costs instead.
Try negotiating expenses with your vendors when possible. Consider a smaller guest list. And think about having the wedding off-season or on a weekday, recommends Dimacali.
Novi Money recently polled married couples. When asked what theyd to do save money if they got married again, nearly 21 percent said theyd have a smaller guest list 18.3 percent revealed theyd elope 14.7 percent would choose a smaller wedding party 48.5 percent felt a wedding planner cost too much and 36 percent said wedding favors or a videographer arent worth the costs.
*TheMortgageReports and/or our partners are currently unable to service the following states – MA, NV
Advantages To Taking Out A Wedding Loan
- Fixed repayment terms Personal loans are typically installment loans, which allow you to borrow a set amount of money to pay back over a fixed period of time.
- Lots of lender options Many different financial institutions including banks, credit unions and online lenders offer wedding loans in the form of personal loans. So you should have a number of options to compare to get the best rate for you. Make sure to compare interest rates, fees and loan terms from several lenders. Finally, look for a loan with no prepayment penalty, so you have the option to repay the loan early with no additional fee.
- Select the amount you want to borrow You may have some flexibility in how much money you can borrow when you first apply. While loan amounts vary by lender, offers can range from $1,500 to $100,000. Just keep in mind that the loan amount you qualify for can depend on many factors, including your credit.
- Potentially lower interest rates Depending on your credit, you might qualify for a lower interest rate on your loan than youd pay on a credit card. In February 2022, the average interest rate on a 24-month personal loan from a commercial bank was 9.41%, compared to an average APR of about 14.56% for credit cards, according to Federal Reserve data.
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Best For Limited Credit: Upstart
Why Upstart stands out: If youre considering borrowing for the big day but still building your credit, a loan from Upstart could be an option to consider. Online lender Upstart considers borrowers who dont have enough history to calculate a FICO® score.
- Prequalification You can check rates without taking a hard hit to your credit. Note that prequalification terms arent final and if you decide to submit a full application, youll likely see a dip in your credit scores.
- Fast funding You could get cash deposited into your bank account as soon as the next business day if you accept loan terms by 5 p.m. Eastern time .
- Flexible loan amounts Upstart offers loans in amounts from $1,000 to $50,000, which could be more than enough to cover a wedding reception, ceremony, photographer and other expenses for the occasion. Loan terms are either 36 months or 60 months.
- Origination fees Upstart charges an upfront origination fee of 0% to 8% of your loan amount. This fee is taken from the lump sum before its given to you, which is something to consider when deciding how much to borrow.
Do Most People Get Loans To Pay For The Wedding
Personal Finance · 06 Mar 2020
Weddings are notoriously expensive, but as a day celebrating the love of your life, they’re widely considered to be worth it.
Weddings are notoriously expensive, but as a day celebrating the love of your life, they’re widely considered to be worth it.
But when you see the numbers thrown around for your big day, it can be alarming. Just how do people afford it? The answer is, there are many ways to get the money you need, including taking out a wedding loan.
Do most Australians get wedding loans?
Although it’s not something that most people talk about, research shows that more than half of Australian couples get a wedding loan to help create their dream day.
According to government research, 60% of couples take out a personal loan to pay for their wedding.
Other forms of funding include taking out savings, getting help from parents and using credit cards.
Why get a wedding loan?
It’s no secret that weddings are expensive, but not many people realise quite how much they cost until they start planning their own.
When you add together all the ingredients of your special day, research shows that the average wedding in Australia costs $36,200. Since most people don’t have that level of savings to hand, it’s no wonder that wedding loans are so common.
Credit card debts are one of the leading causes of money problems in Australia, although getting a personal loan to pay off credit card debt is one way to help with that.
Freedom of choice
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Check Your Credit Score
Before you apply for a wedding loan, see what lenders will see. Pull your credit report for free at AnnualCreditReport.com. Request to remove any bad marks and report fraud if accounts that arent yours are on your report. You can also use your bank or credit card issuer to check your free credit score, or other apps that pull your information from the major credit bureaus. And, if your score isnt where youd like it to be, youll have time to make improvements before applying for a loan.
Checking your credit score also will give you a good idea of how much loan youll be eligible forand what type of interest rate you can expect. For example, if you have an excellent credit score, youll usually qualify for the lowest interest rate available. If you have a good or fair credit score, your interest rate might be a little bit higher. Alternatively, if you dont have great credit, you may need to ask a co-signer for help qualifying or getting a lower interest.
You Start Your Marriage In Debt
Picture this: You get back from your honeymoon, sun-kissed and relaxed from an amazing week at the beach. But then you remember your wedding loan. Ugh. Now, instead of starting your newly married life thinking about your future together, you and your spouse have to worry about paying for the past.
Wedding loans cause unnecessary stress in a marriage. In fact, our research found that money is the number one thing married couples fight about, and its the second leading cause of divorce, just after infidelity.
Debt can even keep some couples from buying a house or having kids. And if your family took out a wedding loan for youwell, lets just say holidays are real awkward when your father-in-law keeps hanging that over your head. Trust me, its better to start off your marriage debt-free with all the possibilities ahead of you.
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How To Qualify For A Wedding Loan
Taking out a wedding loan requires you to both apply and qualify for the money. A few things you can do thatll help you qualify for a new personal loan include:
- Check your credit. By requesting a copy of your credit report, youre able to not only look for potential errors , but also see where your credit stands before you apply. If you need to work on improving your payment history or reducing your credit utilization, checking your credit score early on can ensure that you have enough time to make changes.
- Lower your debt-to-income ratio, or DTI. Lenders typically look at your debt-to-income ratio, or DTI, to determine if you meet their income requirements. Your DTI compares your gross monthly income to the minimum payments required on any existing debt. If your current debt accounts for too much of your paycheck, you may have a tough time getting approved for a new loan. Paying down other debt can lower your DTI.
- Get your paperwork in order. Lenders will likely request certain information and documents throughout the application process. These commonly include proof of identity, proof of employment, and proof of residence.
- Compare rates from multiple lenders. Loan offers can vary widely depending on the lender. Its a good idea to look at rates, terms, and fees from more than one lender.
How A Wedding Loan Will Impact Your Credit Score
When you shop for loans, most lenders offer a prequalification process that lets you see what terms you might qualify for without hurting your credit score. However, the formal application process requires a hard credit check, which temporarily drops your score, between one and five points.
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Are Wedding Loans A Good Idea
10 Min Read | Apr 1, 2022
Youre months away from the big day, but youre already thinking about all the things you need to do. Theres the venue, the caterer, the photographer, the flowers andof coursethe dress. The more you plan, the bigger your to-do list grows. Pretty soon, the details start to add up, and youre wondering how youre going to be able to afford everything.
Hey, I get it. Planning a wedding can feel super overwhelming. You might be tempted to take out a wedding loan to make sure all your dreams come true for the big day. But you can still have a meaningful wedding without going into debt!
Im diving into the truth about wedding loans and what they really cost you. Plus, Ive got some ways to help you tie the knot and stick to your budgetno matter how you choose to celebrate.
Where Do I Get A Personal Loan For A Wedding
Because a wedding loan is a type of personal loan, you can get them at banks, credit unions, or online lenders. Choosing the right place to get one depends on your credit score, income, and other factors that will help you qualify and get the lowest interest rate.
Some online lenders do have loans designed specifically for weddings that may have shorter terms, lower total amounts, or better interest rates. Be sure to shop around, compare lenders and compare personal loans before choosing one and get prequalified when you can to get personalized estimates for your situation.
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Ways To Cut Down On Wedding Costs
If youre worried about how youll pay for big wedding expenses, theres one thing to consider before you take out a loan or line of credit: Trim down your budget.
While this isnt the most exciting approach, it can be a great way to enjoy your big day without starting your marriage off in debt.
Consider these ideas for hosting a cheaper wedding :
- Opt for a buffet instead of a seated dinner. Catering companies typically charge much less for a buffet-served meal compared to a plated dinner. You can easily save hundreds of dollars by going this route.
- Find an affordable venue. You might be amazed at how well the right flowers and decor can transform an otherwise-underwhelming space into your dream wedding. Consider renting out lower-cost venues, such as a church reception hall or even an outdoor park.
- Put your guests behind the camera. Theres no replacement for a talented photographer, especially for ceremony photos. But for the reception, you could let your photographer leave early and offer baskets of disposable cameras to your guests. Youll get some candid shots you might not have seen otherwise and save hundreds on those extra hours.
- Elope. Do you dream of an over-the-water hut in Bora Bora but cant swing a pricey honeymoon after your big wedding? Combine the two and just elope. You can have the honeymoon and private ceremony of your dreams, and still host a smaller celebration with loved ones when you return.