You must be smart with your money throughout all stages of life. So if you’re getting married, you’ve most likely fielded a lot of related advice. Yet, there’s no right or wrong way to plan your nuptials. And one question sits at the top of everyone’s mind: can you get a loan for a wedding?
Every couple is different. When paying for a wedding, some couples might use credit cards. However, others may have considered taking out a loan to cover their wedding costs through specialized wedding loan lenders.
Keep reading to learn more about the answer to “Can you get a loan for a wedding?”
The Cost of Modern Love
Personal finance is a growing concern for today’s newlyweds. Depending on the location and the number of people you invite, a wedding can prove outrageously expensive. But, of course, there are also your tastes to consider.
In Canada, the average wedding costs about $42,400. Still, some couples mark their union for less than $10,000. Most couples, however, host significant wedding events with several social gatherings that include friends and family members. As these events unfold, costs can rise. These expenses can prove too much for a new couple to bear in some instances.
Please look below to see how much Canadian couples typically borrow to pay for their weddings.
Can You Get a Loan for a Wedding?
With this in mind, you might wonder whether you can secure a loan to cover wedding expenses. There is such a thing as a wedding loan. It’s an unsecured loan that you can use to cover the costs of your big day.
The interest rate of a wedding loan depends on the individual’s credit history and scores. However, a no-interest credit card can be a more cost-effective option for paying wedding expenses, even with good credit.
If you’re pursuing a wedding loan, you might want to try a local credit union that might offer more flexible terms. For example, a credit union might prove more willing to negotiate various terms such as:
- The loan’s terms and conditions
- The loan amount
- The interest rate on the loan
By negotiating these points, you can make your wedding loan more affordable.
A Closer Look at Wedding Loans
A wedding loan is a personal loan. It’s an alternative form of financing for weddings. Still, it’s a better alternative to a high-interest loan or credit card once you’ve used up all your cash.
Wedding loan lenders have their reasons for calling them wedding loans. But, first, it gets people thinking about personal loans as an option for financing their wedding.
For instance, you may have realized that the cost of your wedding exceeds your savings or available financial resources. In these instances, you might consider applying for a wedding loan.
Getting Started With a Wedding Loan
You can apply for a wedding loan at any time. However, it’s important to remember that you’ll need to restart repaying the loan as soon as you receive funding. Accordingly, it’s a good idea to consider the timing of your loan.
You’ll want to wait until you use all available cash. Then, you can consider financing your wedding expenses. This practice can help you to avoid extra interest.
When you’re ready for a wedding loan, the process is straightforward. You can usually apply for a wedding loan online as an individual or couple.
Smart Planning for Wedding Loans
Ideally, you’ll want to take out the smallest loan possible for your wedding. Therefore, wedding loan lenders will approve you based on the loan amount, credit score, income, and debt-to-income ratio. You may also find that you have to provide other additional information during the approval process.
You will most likely get approved for the loan if you have a good credit score. You’ll probably also receive a great interest rate. Applying for a joint wedding loan can increase your chances of getting approved—more on who should apply for the loan in a moment.
Weighing Your Options
You may not have access to more affordable financing options. In that case, you might find a wedding loan is a viable solution for your needs.
It helps to think of a wedding loan as a last resort. Do not consider it a way to pay for over-the-top wedding plans. It would be best if you tried to avoid needing a wedding loan altogether. Instead, plan a budget well in advance to help you save and pay for your big day.
How a Wedding Loan Helps
If you apply for a wedding loan, it can provide several benefits. For example, a wedding loan usually has lower interest rates than a credit card.
Also, a financier may give you a longer term for your funding. For example, they may offer you a repayment term of two to seven years.
Otherwise, a wedding loan is a fast access to needed funds. Also, a wedding loan is flexible, and once you receive the proceeds, you can spend them as you please.
Points to Keep In Mind
It would be best if you also thought about the possible drawbacks of a wedding loan. Again, every couple is different. However, a wedding loan can put any couple in debt for a year or longer.
Also, you could get stuck with a high-interest rate if you don’t receive favourable terms from the lender. Furthermore, the loan may have additional fees you may not have considered.
The biggest drawback to a wedding loan is that it can start your marriage off in debt.
Keeping an Eye on What is Important
Your marriage is probably one of the most incredible days of your life. However, that doesn’t mean you should forget about your other responsibilities.
When wedding planning, it’s also essential to consider your long-term savings goals. These goals might include:
- A house
- Building a financial nest egg
- Starting a family
In other words, it’s a good idea to enter a wedding loan agreement financially prepared. You’ll want to plan. With this in mind, it’s a good idea to develop a detailed timeline, total wedding budget, and repayment plan for your wedding loan before accepting funds.
Why You Might Consider a Wedding Loan
There are a few reasons you might think about getting a wedding loan. In some instances, a wedding loan can serve your needs well.
For example, managing finances in the “new normal.” You may have already saved and budgeted for your wedding expenses. However, you don’t have the cash on hand to cover deposits or a mound of bills that came in all at once.
You may have relatives committed to helping you with wedding costs and send money soon. However, you also have vendors who will move on to working with another couple if you don’t leave a deposit right away. It could make sense for you to secure a wedding loan in these cases.
Balancing Your Expectations
In another scenario, you and your other half may have been putting aside savings for your wedding for several months. However, you don’t want to put all your catering expenses on your credit card. What’s more, the rewards points you’ll earn won’t cover all the interest you’ll pay if you do so.
The important thing is to have a good plan for repaying your wedding loan, no matter your circumstances. For example, you might need it to bridge a temporary gap in cash flow. In that case, a wedding loan may serve your needs perfectly.
Alternatively, you may not have considered how you’ll pay off a wedding loan. Still, you want extra room in your budget for an overly extravagant wedding dress.
Nevertheless, you may want to think again about applying for a wedding loan. It’s not worth starting your marriage buried in debt, even if your wedding pictures look phenomenal.
Establishing a Wedding Budget
Your wedding budget is one of the essential parts of wedding planning. You’ll need to begin planning your budget by considering your priorities. Here’s where you’ll take the time to get realistic about what you can and cannot afford.
For instance, you and your other half may want to buy a home right after the wedding. Alternatively, you may have significant expenses that are coming soon. If so, you’ll want to consider a more conservative wedding plan.
Planning Your Wedding Finances
Now you’ve established what wedding goals are realistic for your circumstances. Next, you’ll need to figure out your financing.
Again, there are many ways that you can finance your wedding. However, the most common financial instruments used for weddings are personal loans and revolving lines of credit.
A personal loan is also called a signature loan. It’s an unsecured loan that usually has a value between $1,000 and $35,000. This kind of loan has a fixed term and interest rate. You’d repay the loan in instalments monthly. You’ll continue making payments until you’ve repaid all the borrowed funds.
A revolving line of credit may also have a value between $1,000 and $35,000. However, the revolving line of credit would replenish as you make payments.
Money-Saving Wedding Ideas
No matter how you finance your wedding, you’ll want to make your funds go as far as possible. With this in mind, you may consider a few ways to cut costs.
You might send out fewer invitations. For example, you could invite only your closest friends and relatives. You could also consider arranging the wedding on your own.
You may also cut down on extras like alcohol and décor. You can also choose a different venue, like an open space, instead of a popular restaurant.
You could also try tactics like booking your honeymoon ticket early to save on wedding expenses. You could try to order everything in advance. With some creative thinking, you can find great ways to save on the cost of your wedding.
Here’s a short checklist of ideas to save money when planning your wedding include:
- Printing your own schedule of events, wedding invitations, table cards, and other print items;
- Having a paid bar instead of an open bar (collective sigh)
- Serving finger foods such as canapés and appetizers instead of full entrees
- Downsizing your whole wedding in general and keeping it to close relatives and a tighter circle of friends
- Working with a local designer for the wedding dress or other wedding party apparel
- Getting a smaller ring (we cannot guarantee your partner will agree!)
- Having a local bachelor or bachelorette party
Minding Your Credit
You may have excellent credit. However, it might prove tempting to put wedding expenses on your credit card.
However, there’s something that you should consider. You may have a great introductory credit rate. Still, those rates only last 12 to 18 months. Once the initial period passes, your credit card rates can go up. Anytime the credit card company decides to change its rates or rates vary across the board, you will face higher repayments.
How to Get a Wedding Loan With Bad Credit
If you want to finance your wedding and have bad credit, you should take a few steps. First, you’ll need to improve your credit score.
You’ll want to pay down your debt and ensure all your bills are up to date. Next, you’ll want to order your credit report from all three reporting agencies. Finally, you’ll need to dispute any mistakes with the credit agency if you find any errors.
You also want to shop around for wedding loan lenders. Again, it’s crucial to find the best interest rate and loan terms for your needs. These are reasonable steps to take, even if you have good credit.
Who Should Apply for the Loan?
It makes more sense for an individual to apply for a wedding loan in some cases rather than as a couple. Then, the partner in the union with a better credit profile can place the application in their name.
A few things can make one person a better loan candidate. For instance, one of you may have a higher annual income. Also, one of you may have lower credit card and debt payments.
In addition, one of you may have a higher credit score. Furthermore, one of you could have a more extended credit history. These are the factors that wedding loan lenders review when determining the terms of a loan.
Making a Final Decision
Ultimately, it’s up to you to decide whether you need a wedding loan. First, you’ll need to consider whether you can afford to pay your existing wedding expenses with cash or savings. These methods are typically better than incurring debt to cover your costs.
It’s essential to live within your means. It would be best if you always thought about your long-term financial stability.
Still, wedding expenses can hit you all at once. Not everyone has the cash to cover the costs easily. If you face this dilemma, you might find that a wedding loan is an excellent way to distribute your expenses over time.
Increase Your Understanding of Finances
Now, you know the answer: “Can you get a loan for a wedding?” Hopefully, you have the information you need to make an informed decision.
There’s plenty to learn about managing your finances. At Creditpicks, we specialize in providing well-researched information that can help you to improve your long-term financial health. Please visit our blog and subscribe to our newsletter to learn more about managing your money.
Temper your expectations. Though we have all seen the movie-like dream weddings online, the fact is that you can have a great wedding experience even without all of the excessive fanfare. Focus on the personal aspects of your wedding instead of what you may feel is socially expected and will look good on Instagram.
Remember that though this is an important day in your life, it is still just one day (or maybe a weekend), and you have a whole life ahead with your new partner. Setting yourself up for a financial catastrophe due to wedding overspending is just not worth it, not to mention that it is a very tricky way to start your new life.