The average American wedding costs more than $44,000.
Even when family pitches in, sometimes that isn’t enough to cover the price tag of an entire ceremony. Some couples rely on personal loans for wedding expenses rather than compromising on the wedding of their dreams.
Not everyone wants to finance a wedding.
However, it can be a responsible way to afford the deposits that many wedding specialists and venues require. In fact, if you’re a savvy borrower, you could avoid paying any interest on a wedding loan.
If you need some tips to get some liquid capital for your wedding, I have you covered. But I’ll also include some ways you can avoid borrowing and still have a once-in-a-lifetime wedding ceremony.
What is a Wedding Loan?
Few lenders, if any, have a special wedding loan offer. A wedding loan is a personal loan that finances your wedding costs. With a personal loan, a lender gives you all the money up front and you pay them back with monthly installments.
In general, a personal loan for a wedding will take several years to pay off. You’ll have some options when deciding on the timetable. The longer the reimbursement period, the smaller your overall monthly payments.
Lenders make money off loans by earning back a bit extra through interest.
You’ll have to decide if you want a loan with a fixed or variable interest rate. With a fixed interest rate, you’ll make the same monthly payment at the same interest rate no matter what. Generally, a fixed interest rate will have a higher interest than its variable counterpart.
Variable interest rates change according to the market. While it may be cheap now, you could end up paying more interest overall if interest rates rise while you’re paying back your loan.
Keep in mind that your credit score and credit history will have a massive impact on interest rate offers.
Who Should Get Personal Loans for Wedding Expenses?
While traditionally the extended family will help pay the bills, this isn’t always possible. You might also want to avoid asking your family for money in the first place. With a payback plan in place, personal loans for a wedding are a safe and worthwhile option.
You probably don’t have the capital you need to pay for all the wedding expenses out of pocket. A personal loan allows you to make the purchases you need right away, rather than saving for years to have the wedding of your dreams. Just be sure your budget has room to meet the monthly payment.
Another benefit of using a personal loan for a wedding is preserving your savings. Your spouse might become unemployed, or a sudden emergency might occur. An emergency fund is an essential safety net for any family — especially a new one.
Maybe you could pay for the wedding out of pocket, but then you’d have nothing left. A personal loan is actually safer than paying from your savings account.
And as an added bonus, you’ll have an easier time planning your wedding when you’re in control of the finances. You don’t have to worry about negotiating with your families, which you would if they were footing the bill.
What About My Credit Card?
A credit card is a great option in a pinch. You probably don’t have enough credit to finance your entire wedding. However, it’s an easy way to cover a few thousand dollars of wedding expenses.
Depending on your credit score, you may avoid paying interest on wedding purchases entirely. The secret is to sign up for a card with a 0% APR introductory offer. This special offer tends to extend from about six months to two years.
However, you shouldn’t max out your credit line with wedding costs. Most credit cards have a higher interest rate than personal loans. Even the best cashback bonuses can’t save you there.
The best thing about a personal loan? It has a clear end. On the final monthly installment, you’re debt free. That’s not the case with credit card debt, which could linger for years if you can’t pay it down.
And if you have bad credit, you might not even have a credit card at all. Or if you do, the credit line couldn’t cover the cost of the florist. Thankfully, there are some good credit cards for bad credit.
How Can I Avoid Borrowing?
Thanks to interest rates, your best plan of action is to avoid borrowing. Because modern weddings are so expensive, brides and grooms have come up with some smart ways to control wedding costs.
Cut down on nonessential parts of your wedding. This might mean fewer flowers and decorations and booking an area with natural beauty.
Some couples even push back the wedding until they have enough liquid cash to afford all the expenses. It’s not ideal, but it does save you from paying the high interest rates of a wedding loan.
Or, if you can’t wait, host an affordable, small reception. You won’t have to delay your marriage and can throw a larger wedding ceremony in the future when you’re financially prepared.
Your Dream Wedding Is in Reach
Whether you’re borrowing or postponing your ceremony, you can afford the wedding of your dreams. Remember to have a repayment plan in place before taking out personal loans for wedding expenses.
Since you have several lenders to choose from, take some time looking for the best deals on personal loans and credit cards alike.
And remember: Your dream wedding will still be there for you when you’re ready for it.