Credello: Should You Use a Wedding Loan? Here's What You Need to Know

Many people dream of their wedding day. You likely have an idea of what you want yours to be like, what the venue will look like, who will be there, etc. One thing is undeniable, though: weddings cost money, and you'll need to find a way to pay for the celebration if you plan on tying the knot.

This is when you might start thinking about wedding loans. You have probably heard of the concept, but you may not know how they work. We'll break down some wedding loan basics right now so you can decide whether one is right for you.

What is a Wedding Loan?

If you approach a lending entity, you'll probably never hear them advertising a "wedding loan" by this name. Instead, you'll want to look for a short-term, multi-purpose loan. It's your prerogative whether you choose to spend the funds on a wedding.

You'll want to find an entity, such as a bank or credit union, that will extend a personal loan offer with a favorable interest rate. As always, it's important to shop around to find the best possible terms.

Why a Wedding Loan Makes Sense

Generally, you'll take out a wedding loan if you don't have the cash to cover renting the venue, paying the caterer, or other wedding-related expenses. If you can lock in a lower interest rate on the loan than you'd get on one of your credit cards, you can save money on interest if you move in this direction.

You should have no issues getting a short-term loan at a reasonable rate if you have a good credit score. Often, you'll apply for the loan either online or in person, and you can have an answer in a few minutes or less. 

You can also expect to get that money quickly. Usually, it will take only one business day to get it deposited into your account. You can then continue to boost your credit score if you pay off the loan expediently. 

Potential Drawbacks

You should know about potential drawbacks if you're thinking about getting a wedding loan. The interest you'll pay is one factor that is at the top of that list. 

If you pay back the loan quickly, the interest on it should be minimal. However, if you have to carry that debt for a while, the interest can accumulate rapidly.

Also, if you go this route, you're starting your marriage with debt hanging over your head. You'll have to think about whether that's something you want. 

Money problems can cause stress in relationships. If you go with a more modest wedding and avoid going into debt, you'll be starting the marriage with a clean slate and eliminating a potential source of conflict.

Marriage Loans Make Sense Sometimes

Marriage loans are not for everyone, but they can make sense in some cases. The time when you're most likely to get one is if you need a little extra cash for the wedding and have a good credit score. If you're in this situation, you should be able to get a short-term loan from a bank or credit union without much trouble.

You can use the money to rent the venue, hire a DJ, pay the caterer, etc. If you can pay off your loan before much time passes, you can even improve your credit score.

You should think about whether you can pay back the loan quickly, though. If you can't, watch out for the interest you'll owe. You may also want to avoid getting a wedding loan if you're concerned about starting the marriage in debt. Monetary issues can be a source of conflict in some relationships and minimizing debt could minimize a source of conflict.

Weigh the pros and cons and decide if a wedding loan makes sense for you. This is potentially a way to get some fast cash to fund your special day as you and your partner publicly declare your love for each other.

Source: Credello

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Categories: Personal and Family Finances

Tags: Debt, Financial Services, Personal Finance


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