Should I Take Out a Personal Loan to Pay for My Wedding?
That special day is finally on the horizon – you’re engaged and excited to start planning your dream wedding! But in the midst of picking china patterns and reception menus, a sobering thought hits you: how am I going to pay for my wedding?
The average cost of a wedding today is over $30,000. Even a modest affair starts at around $15,000. For many couples, affording a Pinterest-worthy wedding means taking out a personal loan to cover the expenses.
But, is borrowing money for your special day financially wise?
Understanding Personal Loans
A personal loan provides an upfront lump sum payment that you repay in installments over time. Interest rates and terms vary widely depending on your credit score and income.
People commonly use personal loans to consolidate high-interest debt, finance home renovations, or cover unexpected medical bills. Their flexibility also makes them an option for funding once-in-a-lifetime costs like weddings. At the same time, you don’t want to be dragging around debt for years afterward, either. It’s definitely something to think hard about.
Pros of Personal Loans for Weddings
Compared to slapping everything on credit cards, personal loans have some nice pluses:
- You get a fixed monthly payment over a set number of years, unlike credit cards, where the payment can vary all over the place. Makes it easier to budget when you know the exact amount owed each month.
- If your credit score is really good, you may get an interest rate of around 5-6%. Way better than the 15-25% credit card charge!
- Once approved, the money lands in your account within days. Super helpful to cover deposits and other wedding costs you need to pay right away, rather than waiting until you’ve saved up the full cost over time.
- Online personal loan providers like Level provide a quick and easy application process and very competitive rates compared to traditional banks.
Cons of Using Personal Loans for Weddings
It’s easy to focus on the benefits of personal loans when wedding planning excitement takes over! But be aware of their downsides before borrowing:
- Long-term financial commitment – It may take 3-7 years to repay a personal loan. Newly married life often comes with unanticipated costs that make ongoing loan payments feel burdensome.
- High interest for poor credit – Borrowers with scores below 580 often get assigned interest rates of 15% or more. You’ll end up paying far more than the original loan amount over time.
- Risk of overborrowing – Couples frequently underestimate wedding costs and overestimate what they can afford monthly. Avoid borrowing more than you can realistically repay.
While using a personal loan for your wedding provides short-term convenience, it chains you to years of costly debt repayments. Missed or late payments mean credit damage, collections calls, and penalties.
Alternatives to Personal Loans
Before pulling the trigger on wedding-related debt, explore other funding options:
- Save over time – Start a separate wedding savings account and automatically deposit a portion of each paycheck. Small, regular contributions add up faster than you think!
- Trim costs – Scrutinize every wedding expense to find savings. Forgo little-used items like ceremony programs or fancy invitations in favor of practical digital options.
- Ask for cash gifts – It’s customary in some cultures for guests to offer money instead of traditional presents. Even modest contributions from each attendee put a decent dent in costs.
- Earn side income – Use your free time over the wedding planning stretch to make extra cash via dog walking, rideshare driving, website design, or other flexible side hustles.
With discipline and creativity, funding your wedding without debt is very feasible!
Things to Consider Before Taking a Wedding Loan
Getting carried away is normal when every Pinterest search floods you with gorgeous wedding inspiration! So before visiting lenders, pause and seriously weigh the following:
- Your repayment abilities – Calculate the monthly loan payments needed to pay off different loan amounts in 3-5 years. Be realistic about how much fits your current and expected future budget.
- Impact on your credit – Too many loan applications in a short timeframe can dent your score. Paying late also damages your credit. But on-time payments help build it back up.
- True cost comparison – Compare the loan’s APR and total interest paid over its lifetime to what you’d pay in credit card interest. High loan rates could make cards cheaper despite their variable APRs.
- Wedding vs. marriage priorities – Yes, you want a beautiful ceremony the Internet would envy. But the marriage following it matters more. Overspending on a single day compromises the financial foundation for your lifelong relationship.
No doubt your wedding day deserves to be incredibly special. But as you plan, try not to get so dazzled by Pinterest-perfect images that you lose sight of financial wisdom.
Borrowing money simply to have your dream one-day event can burden you with oppressive debt for years. And marital bliss will be tougher to attain when struggling under the stress of large monthly loan payments.