The answer can be a yes or no, depending on the situation at hand. When you think of wedding venue, catering, flowers, gown, the ring, entertainment among other expenses, then you get to realize that weddings can be notoriously expensive
What is a wedding loan?
A wedding loan is a loan taken specifically to foot wedding expenses. In most cases, this is a marketing term. In real sense, wedding loans are personal loans, and just like any other loan you qualify based on your creditworthiness. The term wedding loan is used to attract potential clients.
When should you apply for a wedding loan?
Borrowing money for your wedding is something that you should not dash into. This loan makes sense only when:
- You need money very quickly – Most service providers ask for down payment to show commitment. In such instances, you could be requiring some huge amounts to settle the down payments and this is where a wedding loan comes in handy.
- You can pay it back – Most lenders check for your ability to pay. So, if you have the ability to clear the loan after the wedding, then why not have it and have your dream wedding.
- You have a good credit score – A good credit score increases your chances of getting a loan at low interest. So, if you have an option of taking a loan at a favorable interest rate, then, why not enjoy your dream wedding.
What to look for in a wedding loan
If you have decided to apply for a wedding loan, then here are the features that you should look for:
Unsecured Loan – Your wedding loan should be unsecured. This is to mean that the loan is not tied to any collateral. It is very risky to borrow against your home or vehicle for a project with no financial returns.
Low, fixed Interest Rate – Low interest rate makes the loan cheaper making it easy for you to meet your monthly installment and remain liquid. A low interest loan is better than depleting all your savings to finance your wedding. On the other hand, a fixed interest rate makes it easier for you to budget your monthly income.
Short Tenure – A short tenure helps you save on interest that you could have otherwise have paid if you prolonged the repayment period.
Monthly Installment – Make sure your monthly installment fits your budget. You’d rather prolong the loan tenure for you to pay the installment that your income can accommodate.
Total Interest Costs – You need to figure out how much you’ll pay as interest at the end of the day. If possible, try to clear your loan within the shortest time possible to save on the interest.
Pros and cons of wedding loan
Pros
- They are convenient way to get quick money, especially where time is of essence
- They are easy to get given the huge number of lending institutions offering the same facility.
- The loan comes with better interest rate and other better terms as compared to credit card
- Some creditors don’t charge prepayments
- It’ll help you improve your credit score
Cons
- The loan attracts an interest
- You’ll be starting up your marriage in debt
- Existing loans may make it difficult for you to qualify for a wedding loan
- A wedding loan may make you feel flashy with cash and spend extravagantly
Bottom Line
The decision on whether to apply for a wedding loan or not depends on the situation at hand, the information above should guide you on making an informed decision. However, if the money is readily available, why pay interest when you can avoid it.