Weddings are a lavish affair. There’s a lot that needs to be pre-planned to make your wedding day unforgettable. So if you’re planning a wedding, prepare yourself for the hefty expenses that’ll come your way.
Brits spent an average of £24000 on wedding costs as per 2020 data, roughly 80% of the average annual income of a UK household as per FYE 2020 – £30,800. Even though your wedding is a significant life affair, spending 80% of a year’s earnings doesn’t make sense.
The average sum of money that people spend on wedding seems to be increasing with each passing year. Instead of taping into your savings, spread the cost of your wedding over a period with a wedding loan. Wedding loans can help you manage the wedding expenses smoothly.
Read on to find out how you can use a wedding loan to finance your wedding.
How do wedding loans work?
A wedding is more than just about the wedding day. One needs to have a firm financial ground to stand on when they start a new life with their partner. Using up your savings to cater to the wedding expenses may not be the ideal move. You want to use some of that money to create a better lifestyle for your partner – such as home refurbishments, insurance, etc.
Wedding loans are essentially unsecured personal loans that you can use to break down a hefty bill into convenient and affordable monthly instalments. You can use the loan funds to cater to all the wedding expenses and then repay the loan over monthly payments. Wedding loans can help you cover most of the wedding expenses, including:
- Wedding venue and entertainment costs (music, special appearances, etc.)
- Catering costs – appetisers, meals and the wedding cake
- Wedding photography
- The couple’s attire
- Wedding rings
- Transportation costs
- Registrar fees
All you need to do is work out an amount that is sufficient to cover all the extensive costs, considering your affordability. A good way to assess if you can afford the desired loan amount is by creating a tentative monthly budget and checking whether there’s room for repayments or not.
Apart from your income, your credit score plays a significant role in driving the lender’s decision. Instead of applying for a loan straightway, plan your application strategically. Self-assess your credit score by pulling out a copy of your credit report. This way, you’ll know what kind of offers to expect when you apply for a wedding loan. The likelihood of your loan’s approval increases if you have a solid credit history.
After a lender approves your loan, you can use the funds at your discretion, as long as you repay the money as per your repayment schedule. Missed repayments can gravely impact your credit profile, hampering your chances of securing credit to fulfil future life goals.
Should I use a credit card or a personal loan for wedding expenses?
Personal loans are unsecured loans, which means your assets are not involved in the loan’s obligations. This also implies that you pose a greater threat of default to the lender, which is why the interest rates for personal loans are slightly higher than that of secured loans.
However, a personal loan is way cheaper than a typical credit card or authorised overdraft.
- Lower interest rates than credit cards and overdrafts.
- Affordable and fixed monthly instalments.
- You can borrow a sizeable amount of money to cover extensive wedding costs.
- Quick loan disbursal after loan approval.
- Personal loans are unsecured, which means your assets are not involved in the equation.
Credit Cards and Overdrafts:
- Interest rates rise as soon as the promotional period expires.
- You may end up paying for a prolonged period due to smaller monthly payments.
- Lower borrowing limits restrict your transactions.
- Additional charges for accumulating excessive outstanding balance on credit cards.
- Unauthorised overdrafts can incur high costs.
Where to find small wedding loans?
The minimum loan amount varies among different lenders. The typical limit, however, is usually £1000. If you are looking for a small, short-term wedding loan, there are several lending institutions available for you to choose from:
- Loan brokers: Trustworthy loan brokers can be a one stop shop for your financial needs. You can compare loan offers from multiple lenders at the click of a button. Loan Broker provides you with a quick and convenient loan journey, free of cost, unlike other online broking platforms.
- Credit unions: A credit union is a financial co-operative that provides a range of financial services to its members. Members of the union pool in their savings, and the money is then used to help other members in need. Credit unions offer loans at lower interest rates than most financial institutions – 1% to 3%. However, to borrow from a credit union, you’ll need to build up some savings with them first.
- High-street banks: High-street banks offer personal loans at decent interest rates. However, the lending criteria for these banks can be strict. Most banks prefer customers who are already associated with the bank. Besides, you may need a stellar credit history to qualify for competitive interest rates and loan terms for a bank loan.
Can I get a joint wedding loan with my partner?
You can certainly apply for a joint personal loan with your partner to finance your wedding. Join loans lenders consider both credit profiles. Plus, you and your partner have to take shared responsibility for repayments.
If one partner fails to repay the loan, then the onus of paying it off falls on the other. Once you sign a joint loan agreement, you agree to pay off the entire amount if the other partner can’t or won’t repay.
Applying for a loan jointly may help in increasing your likelihood of qualifying for a loan. However, if your partner has a below-average credit rating, it may be wiser to avoid the idea of joint loans. Joint loans can link your credit profile to your partner’s. Now, if you apply for credit in the future, the lender will be able to see your partner’s linked credit report and may consider it.
Therefore, it is crucial to self-assess your creditworthiness before applying for joint credit.
Planning a wedding is a stressful process, and going over budget may add to this stress. Don’t let the expenses take a toll on your health. New costs will start kicking in once you start a new life with your spouse. So, instead of exhausting your savings on wedding expenses, prepare yourself for the married life by setting your savings aside.
You should, however, create a budget and adhere to it. It is imperative to keep up the loan’s repayments, and having a budget will help you ensure timely transactions.
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