Wedding Loans: Should You Use a Personal Loan for Your Wedding?

Wedding Loans: Should You Use a Personal Loan for Your Wedding?

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Most people have an idea of their dream wedding, but sometimes the money isn’t there to make it happen. In this case, some couples look to take out wedding loans to cover expenses for the big day. However, wedding loans, which are simply personal loans, are not generally a good idea. Instead, couples should save up enough money and cut costs so they can pay for the ceremony outright.

What Is a Wedding Loan?

A wedding loan is simply an unsecured personal loan. Personal loans can be used for any number of reasons, weddings and honeymoons among them, and you don’t need to prove to the lender you’re getting married to use the loan for your wedding. In general, you can borrow up to $30,000 or $40,000 through a personal loan. Interest rates are based on your creditworthiness and debt-to-income ratio as well as the loan amount and maturity. Typical annual percentage rates (APRs) on personal loans range from 5% to 36%, but even borrowers with great credit may only qualify for rates as low as 10% to 12%.

How to Get a Wedding Loan

You can get a wedding loan from a bank, credit union or online lender. Some lenders, like Promise Financial and LightStream, offer specific wedding loans, but most lenders offer generic personal loans that can be used to pay for wedding expenses. Credit unions can often be the least expensive option for a personal loan as annual percentage rates for federal credit unions are capped at 18%. If you don’t belong to a credit union, consider going to your local bank or shopping online. We wouldn't recommend paying more than 36% in annual interest on a personal loan. Any lender that charges more than this is likely not reputable.

When you apply for a personal loan, lenders will look at your credit history and your debt-to-income ratio. Generally speaking, lenders prefer borrowers with credit scores of 660 and above and debt-to-income ratios under 40%. Some online lenders now factor in educational and employment history in your application, which can be a boon for those borrowers with more limited credit history. At most online lenders you can check your rate without affecting your credit score, so it pays to shop around to get the best deal.

Should You Get a Wedding Loan?

In general, the answer is no. If you can’t afford to pay for your wedding outright, you need to save up enough money and cut costs until you can. Newlyweds shouldn’t start their life together with unavoidable debt, which is exactly what a wedding loan is. By the same token, many young couples are already saddled with student loan or credit card debt, so adding to the debt burden by taking out a personal loan isn’t the best idea. What’s worse is that the wedding loan could even outlast the marriage, but you’ll still be stuck repaying it.

Because wedding loans aren’t usually a good idea, you may want to rethink how much you’re spending on your wedding. With the average cost of a wedding at $30,000, think about how you could use that money for a different purpose by opting for a simpler ceremony. Perhaps you could finally pay off your student loan debt or you and your spouse could put a down payment on your dream home. A wedding, while a monumental occasion in your life, is one day of celebration, and $30,000, especially if borrowed, is a lot to spend on one day. It may be wiser to make a long-term investment in your financial future by buying a house, paying down debt or saving for retirement.

While we can’t recommend couples take out a wedding loan, it is a better option than racking up a lot of credit card debt. A loan gives you a fixed amount of money to work with, whereas a credit card can easily tempt you to overspend money you don’t have. Loans also come with a fixed interest rate and monthly payments, making them easier to budget for. However, both of these are still forms of debt -- and not "good debt" like a mortgage or student loan.

Other Strategies to Pay for Your Wedding

While taking out a personal loan to pay for your wedding should be avoided, there are many other strategies you can use to cut costs, save money and pay for your big day:

  • Create a budget and cut unnecessary costs
  • Sell stuff you don’t need or use
  • Automate your savings into a separate wedding savings account
  • Take advantage of credit card points or 0% introductory APRs
  • Generate extra income through a part-time job or hobby
  • Consider do-it-yourself wedding projects to save money
  • Get a loan or donation from family or friends

These strategies can be used together to help you save up money quickly for your wedding and cut costs on unnecessary wedding planning expenses.

Create a Budget and Cut Costs

If you don’t already have a monthly budget ahead of the big day, now is the time to create and stick to one. First identify and plan all your necessary expenses. This includes things like your rent or mortgage payment, utilities, groceries, transportation costs, childcare costs and healthcare. Secondly, locate areas where you can trim unnecessary expenses and give up costly habits. Do you eat out too much? Daily Starbucks and lunches out can easily add up to a couple hundred of dollars per month. Do you need that all-inclusive cable television package? Downgrading your cable and internet service could save you an extra $50 to $100 per month. Are you using your fancy gym membership? Consider canceling it or switching to a more affordable gym. By taking a hard look at your finances, you may find you can easily save $200 to $1,000 or more per month for your dream wedding.

Sell Stuff You Don’t Need

Almost everyone has stuff they don’t need. Use your wedding planning as an excuse to go through your home, attic or storage unit and identify stuff you don’t need. Do you have extra furniture or other items collecting dust? You can sell these items on Craigslist or eBay, or even host an old fashioned garage sale. While this is not the most glamorous strategy to raise money, it will get you cold hard cash you can use for your wedding. Another bonus from using this strategy is that you may be able to cancel that storage unit if you sell enough stuff, and this alone could save you an extra $50 to $200 per month.

Automate Your Savings

Once you’ve committed to cutting costs, set up an automatic transfer of these savings into a separate savings account. Most checking accounts will allow you to set daily, weekly or monthly automatic transfers into a savings account. A good idea is to set these transfers for the day you get paid -- it’s hard to miss money if it’s not even in your checking account. Finally, make sure to set up a separate savings account specifically for your wedding or honeymoon funds. You don’t want to touch your retirement or emergency funds to pay for your wedding or honeymoon.

Take Advantage of Credit Cards

Credit cards can be a great way to pay for wedding or honeymoon expenses, but only if you use them responsibly. If you have a lot of credit card points, consider cashing these points in to pay for wedding expenses or book airfare and accommodation for your honeymoon. Savvy credit card users have been able to pay for entire honeymoons using points alone.

Another option is putting wedding expenses on a credit card with an introductory 0% APR. Some credit cards will offer 0% APR on unpaid balances for a period of 12 to 24 months. If you know that you can pay the balance off within this time, this can be one way to get an interest-free loan for your wedding. This strategy is not without risks though: credit cards make it all too easy to overspend and you could be hit with high interest rates if you can’t pay off the balance in time.

Generate Extra Income

Another great way to save for your wedding is to generate extra income. You can take on a part-time job, such as babysitting, dog walking, retail work or personal assistant work. Working at a part-time job earning $10 an hour for 10 hours a week will give you an extra $400 per month. You can also freelance your skills, such as tutoring, writing, coding, designing or consulting, to earn money per assignment or per hour. If you have a hobby or craft, consider selling your items on Etsy, eBay or another marketplace. Amateur photographers, for instance, can earn a royalty each time someone downloads their image from Getty Images or Shutterstock. Any of these methods can help you earn an extra few hundred to few thousand dollars per month.

Consider a DIY Approach

DIY wedding projects can easily save you hundreds, if not thousands, of dollars on your ceremony. While the DIY approach is not for everyone, Pinterest and other websites abound with ideas and projects for wedding invitations, party favors, centerpieces, flower arrangements and more. You can also enlist the help of crafty family members or friends to complete these projects.

Get a Loan from Family and Friends

If the above strategies haven’t gotten you enough money, you may want to consider a loan from family or friends. With average personal loan interest rates around 10% to 36%, you can save considerably by getting a loan from a relative or friend. To ensure repayment goes smoothly (and that you don’t ruin a relationship), write up a loan agreement and use a third party person or service to oversee the loan. Only pursue this route if you know you can pay back the loan. There may also be tax implications for the relative or friend making the loan, so make sure he or she understands what those could be.

Madison is a former Research Analyst at ValuePenguin who focused on student loans and personal loans. She graduated from the University of Rochester with a B.A. in Financial Economics with a double minor in Business and Psychology.