A Loan for Your Wedding
No one likes to talk about money, but it’s a big part of wedding planning. Before you even go dress shopping or start tasting cakes, you have to figure out exactly how you’re going to pay for it all.
According to The Knot 2019 Real Weddings Study, couples in the U.S. spent an average of $33,900 on their wedding day – and that’s not even counting the honeymoon. While some couples might be able to afford that out-of-pocket, many others have to find other funding means.
Luckily, there are a few different ways to finance your big day. Some couples put off the event so they can save up while others utilize credit cards. One of the newest means of funding, though, is a wedding loan.
What is a wedding loan?
A wedding loan is essentially a personal loan specifically created with soon-to-be-married couples in mind.
“For a wedding, you have so many parts and pieces of expenditures that come together to create that event, like rings, the honeymoon, the photographer, the caterer. Also, there can be down payments and follow up payments. With [this type of loan], you can disperse the cash as you need,” says Kristin Shuff, senior vice president of marketing for LightStream, an online consumer lender.
How does it work?
If your wedding expenses exceed your budget, you can apply for a wedding loan from many lenders, including LightStream. Be sure to shop around before choosing your lender and examine the terms of the loan:
• What are the estimated interest rates? Are the interest rates fixed, or will the rate grow over time?
• Is it unsecured, or will you need to put up collateral like a home equity loan?
• How soon do you have to start paying the loan back? •How long is the loan term?
• Are there fees or prepayment penalties?
Once you’ve applied, the lender will determine what interest rate you qualify for based on criteria like how much you want to borrow, your income, and your credit score. Then, if you’re approved, the loan should be dispersed directly to your personal bank account.
What are the advantages of a wedding loan?
In addition to flexibility, one of the most significant advantages of a wedding loan is the low-interest rate, especially compared to other traditional financing options. Credit cards, for instance, carry an average interest rate of around 16% currently. Wedding loans, on the other hand, can have interest rates that are half that size.
Another item to add to the pro column for wedding loans is how quickly the money is typically funded. In fact, for LightStream, borrowers can even see funds in their bank account as soon as the same day they apply, say Shuff.
Is a wedding loan right for me?
Of course, any time you’re borrowing money, you’re creating debt, which can be a big drawback for many couples. That’s why it’s important to have a realistic view of your financial situation before committing to taking out a loan. That means creating a budget, a timeline and a repayment plan that also considers your other financial goals (i.e., buying a house, or starting a family). You might even want to talk to a financial advisor before committing to a wedding loan.
And if you decide to take out a loan, remember that it should be supplemental rather than the main source of funding for your wedding.
“No one wants to kick off a lifelong relationship saddled with stressful debt. It’s important that people find what’s in their comfort zone, and it’s a day that forms lasting memories and not something you financially regret,” says Shuff. “[A wedding loan] just gives people the opportunity to plan exactly what they need – and not more.”