Considering a Personal Loan to Finance Your Wedding?

You’ve always pictured yourself having a fairytale wedding straight out of the pages of a bridal magazine. You have boards on Pinterest filled with stunning dresses, unbelievable flower arrangements, elegant tablescapes, and cakes so tall you need a ladder to put the topper on.

The only problem is that this fantasy doesn’t come cheap. When you sat down to start tallying up costs, the estimate quickly skyrocketed to over $35,000.

How can you finance your wedding without draining your savings? For some couples, turning to a personal loan seems like the perfect solution.

But this route definitely needs careful consideration. Let’s explore the key factors to weigh when deciding if a personal loan is right for financing your walk down the aisle.

Understanding Personal Loans

From what you’ve since learned, a personal loan is when you borrow money from a bank or online lender that you pay back over time with interest.

The amount can range anywhere from $1,000 to over $100,000. Unlike specific types of loans for buying a car or house, you can use a personal loan for pretty much anything. That flexibility is what makes it an option for financing a wedding.

Personal loans typically come in two forms – secured or unsecured. For a secured loan, you provide collateral like your home or car that the lender can take if you fail to repay.

The interest rates tend to be lower since it’s less risky for the lender. For an unsecured loan, you don’t put up any collateral, which means the lender is taking more of a chance. To make up for that, the interest rates are higher.

The interest rate you’re able to get also depends heavily on your credit score. The repayment period for personal loans can vary quite a bit but is often between one and seven years.

Key Takeaway: Personal loans provide access to cash that can be used freely. Your credit score determines if you’ll qualify and how much interest you’ll pay.

Pros of Using a Personal Loan

The biggest appeal of going the personal loan route is that it would allow you to have the gorgeous storybook wedding you’ve always pictured without waiting and saving up for years. Your wedding date is just under a year away, and every month that ticks by feels like lost time. You’re so eager to call this wonderful man your husband!

Another plus is that the interest rate and monthly payments on a personal loan stay the same over its set repayment term. Credit card rates can fluctuate and pile on hidden fees, but with a loan, you’d know what your payments would be each month. That predictability helps tremendously in budgeting. Online personal loan providers like Level offer even more competitive rates than traditional banks, as well as a quick application process.

You’d also be able to lock in all your vendors right away by putting down deposits. Venues and photographers get booked up really far in advance for popular wedding dates. If you want that picture-perfect location for your ceremony, you need to act fast.

Key Takeaway: A quick loan closing process would allow you to secure your top choices before others book them.

Read More: Are Personal Loans Better Than Credit Cards?

Cons of Using a Personal Loan

As much as you’d love the convenience of having all the wedding funds at your fingertips, taking on a personal loan isn’t a decision you can make lightly. Once you borrow money, you have to pay it back – with interest.

Depending on the lender and your credit status, the interest rate on an unsecured personal loan can be 10% or higher. That adds a large chunk on top of the original loan amount over the repayment period.

You’d also have to face the reality of starting off your marriage already in the hole financially.

Any money going towards loan payments in those first few years is money you can’t put towards buying a house or starting a family.

You have dreams of future vacations and date nights, too – not just paying down wedding debt.

Key Takeaway: Perhaps the biggest risk is spending more than you can realistically afford just because you have those loan funds available.

Alternatives to Consider

Clearly, loans come with some definite drawbacks. Before resorting to borrowing, you’re exploring ways to cut costs or bring in more funds:

• Get creative – DIY elements, non-traditional venues, and daytime vs. evening reception could save thousands.
• Scale back – Maybe you don’t need that gigantic guest list or gourmet meals. Look for areas to trim.
• Longer engagement – If you give yourself more time to save up, loans could be avoided.
• Family support – Parents have graciously offered contributions as their wedding gift to you.
• Rework registries – Ask for donations towards your honeymoon or future home rather than physical gifts.
• Rewards cards – Charging expenses on cards with good rewards programs help recoup some costs.
• Part-time jobs – You’ve both considered picking up side gigs in your free time for extra income.

Key Takeaway: There are many alternatives to think of if you are not ready for a personal loan. Try the one that is the most realistic for your condition.

Read More: How to Generate Multiple Sources of Income

Tips for Responsible Borrowing

If you ultimately decide to move forward with a personal loan, you’re committed to doing so prudently. You would only borrow exactly what is needed, thoroughly research to find the best loan terms, and budget carefully to pay it off quickly.

You may want to compare interest rates and terms across multiple lenders to find the best deal. Look for offers with no fees.

Key Takeaway: Know how much the monthly payments will be and budget accordingly so you don’t fall behind. Pay off the loan as fast as possible.

Final Thoughts

Overall, while loans offer a fast track to wedding financing, you have to be sure you don’t sacrifice your financial foundation in the process. Yet, there are always alternatives if you’re willing to get creative.