One of the major things covered with clients during our free initial wedding consultation is the creation or acknowledgement of a set budget! Create a budget and only plan things for your wedding you can afford. The smart thing to do is to talk things over with your partner, start planning early, set a sensible limit on spending, save your money, and have a wedding that is within your budget (with little or no use of a loan or credit cards).
The national average cost of a wedding in 2016 was over $35,000. With that said...here enters the popularity of the 'wedding loan'... The 'something borrowed' was referring to something like a special pair of earrings from your mother, not a loan from the local bank. No one recommends that you start your new life out in debt...not even the bank!
What do you think of this increasingly popular trend of taking out a wedding loan? There is no such thing at the bank as 'a wedding loan'. It is simply a personal loan for the purpose of providing funds for your wedding. (A personal loan is an unsecured or signature loan borrowing money without putting up any collateral such as a home or car.) You use the loan to finance things such as your wedding expenses, engagement and wedding rings, reception, honeymoon, and travel. Problem is, the majority of people taking these loans out are those who are spending cash that they don't have.
Couples are seeing reality TV shows that tell them to 'Say Yes to the $11K+ Dress', celebrate "My Fair Wedding", have a "Platinum Wedding", buy that five- or more carat platinum ring, or have that fantasy destination wedding you've always dreamed of. But only your fiancee's happiness and yours are what's importance on this day...no need to try to impress anyone else. Special, personal, or handmade touches can make your wedding day just as fancy as expensive ones.
If you do not have the available cash on hand, here are several other ways to finance your big day without using the personal loan route:
1. Extend your wedding date out and SAVE UP!
2. Simplify your wedding, be frugal BUT HAVE FUN!
3. Call on your friends who are great Do-it-yourself, creative people...you will be surprised how much you can save!
Less Preferred Methods-
4. Ask your family for money.
5. Credit cards - if you have to do this, try to obtain 0% interest rates and pay them off quickly. The only time this is good is if you have the amount of cash on hand but are using the credit cards to help against fraud or for earning travel points.
If you insist on borrowing, make sure you have a good credit score (above 700). If it's lower, you can still get the loan, but you will have a higher interest rate. Hopefully, you will not have to borrow the full amount allocated in your wedding budget...maybe just the initial down payments or deposits for the photographer, venue and/or caterer.
If you have the financial means and discipline to acquire and pay off a loan quickly and wisely, we are not talking to you! And if you do go the route of credit cards or personal loans, don't forget that you will be receiving monetary wedding gifts, use that money to pay your debts down or off, if possible!
Remember, you are planning the experience of a lifetime; but not planning on paying for it for a lifetime! This decision must be made with your partner...it's a financial burden you will have to deal with immediately after the honeymoon. Most personal loans have a duration of three to five year-terms of monthly payments, total loan amounts ranging up to $40,000. It can lead to financial stress down the road in your new marriage. Something else that should be noted here is that one of the top ten reasons for divorce is money/finances.
My opinion...and it's only MY opinion...save the loan experience for a new home, if needed, and have a simpler, less expensive wedding day! After all, a large personal loan may affect how much money you can borrow when you are ready for that new home mortgage loan, or even put your approval of a home purchase in jeopardy. And many young couples already have a high level of student debt from college.
Remember, its the celebration of family and friends gathered and your love for one another that is important...not how much money you spend on your wedding!