Hanneh Bareham | (TNS) Bankrate.com
Whether you’d like a large, extravagant wedding or a small, casual affair, you may find yourself short on cash as you get deeper into planning out the details. This is where a wedding loan could be helpful in making your big day a dream come true.
Wedding loans make sense for some scenarios, but not all. Weigh the alternatives before jumping to a loan to ensure you’re starting your life with your new spouse on the right financial foot.
A wedding loan is often a personal loan used to cover various wedding expenses, including the wedding venue, catering and a videographer.
A wedding loan is marketed toward engaged couples who are planning weddings. Some couples may use a wedding loan to finance certain parts of their big day, such as upgrading catering options, while others will use financing to pay for the whole event.
These loans are easy and quick to apply for — many lenders will even approve you online in a few minutes. The interest rate you’ll receive varies and is typically based on your income, credit score and current debts.
While some loans are marketed specifically as wedding loans, you’re generally free to use any type of personal loan to cover wedding costs, including home equity loans.
How much a wedding loan costs depends on various factors, such as your loan term, interest rate and how much you want to borrow. You can use a personal loan calculator to easily determine how much your exact loan will cost.
The following table shows the costs of a three- and five-year loan with a 10 percent annual percentage rate.
3-year, $10,000 wedding loan at 10%5-year, 10,000 wedding loan at 10%
It’s easy to get carried away planning the wedding of your dreams, especially with the constant influence of social media platforms. But it’s not advised that you take out a wedding loan unless it’s necessary.
When deciding whether to take out a loan, think about how crucial a larger budget really is. If you’re able to reduce costs in any way to better fit your available funds, then a wedding loan may not be necessary and you just saved yourself thousands of dollars.
Since wedding loans are unsecured, you don’t need to put anything up for collateral. While this reduces your personal risk, it increases the lender’s risk — meaning it is harder to get approved and get a competitive interest rate without a good credit score. But if you have excellent credit, you may be able to get a large loan at a low rate.
When considering whether to finance your wedding, it’s important to consider the benefits and drawbacks before apply.
To apply for wedding loans, follow these five steps:
If a personal loan isn’t in your wedding plan or you don’t think it’s the best fit for your situation, there are financing alternatives that may fit more comfortably into your financial portfolio.
Some credit cards offer an introductory 0 percent APR for a set period — typically between 12 and 24 months — after you open the account. This means you have time to pay off the balance without being charged interest.
A 0 percent APR credit card can be a great way to pay for vendor deposits and other immediate costs you can’t cover right away but can pay off in the next few months. Just make sure you can pay off the amount before the promotional period ends.
Try saving for a few years before a wedding. Dipping into a wedding-specific savings account you and your betrothed have will be better in the long run, since you won’t have to pay interest on loans or credit cards used to finance a wedding.
Some family members may be willing to help you pay for a wedding. If a family member wants to help foot the bill for the big day, this is a good way to finance a wedding without having to get a wedding loan, use a credit card or dip into your own savings.
With the cost of an average wedding steadily climbing, fewer people can finance their big day out of pocket. Wedding loans are becoming more widely available due to demand and may offer more favorable interest rates than credit cards and other financing options.
But before you put yourself into debt, consider whether you need to finance wedding costs or if you can reduce the total price by making a few small sacrifices that won’t affect your experience. If you decide that financing a wedding with a personal loan is the right move for you, research and compare rates and fees from many lenders to find the best deal.
• You could use a personal loan to cover several wedding costs, like a professional photographer or caterer.
• How much a wedding loan costs depends on various factors, such as your interest rate, repayment term and loan amount.
• Your eligibility for a wedding loan and how much you can borrow usually depends on your income, credit score and outstanding debt load.
• Before you use a personal loan to finance your wedding, consider alternatives, such as a credit card with a low APR promotional period or personal savings.
(Visit Bankrate online at bankrate.com.)
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