A wedding loan is an unsecured personal loan for wedding expenses. Couples can use a wedding loan to manage the expense of renting a venue, catering, attire, photography, floral arrangements and more. A wedding loan could cover rings or the honeymoon, too.
As a personal loan, you can use a wedding loan for any expense, even if it’s not wedding-related.
“It’s just cash in your account to use however you see fit,” says Christina Roman, consumer education and advocacy manager for credit bureau Experian. But she encourages borrowers to have a clear plan for how they’ll use the funds. “Be very careful when you’re getting that lump sum in your bank account,” she says.
“Weddings may come around once in a lifetime, and while you may budget and DIY as much as you can, the reality is that you still may be a bit short to cover the costs when payments are due,” says Rachael Olson, director of product strategy for personal loans at Discover. Olson says a wedding loan can help you bridge the gap between your savings and wedding expenses while giving you time to pay off those expenses.
A wedding loan can help you manage expenses if you don’t have cash on hand to cover the costs of your wedding. It could make sense if you can get a low interest rate on a wedding loan, can afford the payments and don’t want to tap your savings accounts to pay for your wedding. Otherwise, think twice.
“Consider a loan only when cost-cutting and careful planning is not enough,” says Kyle Enright, president of lending at digital lender Achieve. He specifies that wedding loan repayment should fit into your budget.
You might face financial strain at the start of your marriage if you can only access high-interest wedding loans, have excessive debt or can’t comfortably afford the monthly repayments. That could put a damper on your “happily ever after” before it starts.
John Ulzheimer, a credit expert formerly with FICO and the credit bureau Equifax, warns a wedding loan could enable overspending. “It’s pretty well established that when people have to pay with cash, they tend to be more restrictive and conservative than when they pay with credit and may be more open to spending more,” he says. “The minute you get into wedding planning, the add-ons add up quickly, like flowers you might not realize are so expensive.”
Consider the benefits and drawbacks of getting a wedding loan:
Pros
- Fast funding to pay vendors, usually within a few days of approval.
- No collateral is required for unsecured loans, so you don’t have to risk your car, home or other assets if you struggle to repay the loan.
- Personal loans generally have lower interest rates than credit cards.
- Fixed interest rates can offer predictable monthly repayments and protect you from interest rate fluctuations.
- More money could help you have the wedding you want with fewer budget constraints.
“Wedding loans can help you cover the costs for the day of your dreams,” says Olson. ”You won’t have to make as many hard decisions on how many flowers or what photographer to use. However, it is important to keep in mind that it is still a loan.”
Cons
- It’s always risky to take on debt, and starting your marriage with debt can create financial tension.
- Interest costs and origination fees can increase the overall cost of your wedding.
- Paying for your wedding loan can limit other financial goals, such as buying a home or starting a family.
- You might be tempted to overspend if you have access to more wedding money.
- Unless you have good credit, you may pay high interest rates.
Ulzheimer points out couples might want to buy a house or car together soon, which might be a more thoughtful use of money than taking out a loan for a single day.
And you’ll ultimately pay more for your wedding if you finance it. “Your $10,000 or $30,000 wedding will now be more expensive because you have to pay interest on the debt,” says Ulzheimer.
Set yourself up for the best deal before you apply for a wedding loan. First, consider your budget and know how much you need to borrow – or if you should take out a wedding loan at all. Roman recommends researching vendor costs to prioritize how you’ll use loan funds.
“One of the less-romantic aspects of dating is to have a good understanding of your soon-to-be spouse’s attitudes about spending and money,” says Ulzheimer.
Before applying for a wedding loan, check your credit scores to know where you stand. If you have good credit, you should have the best chance at good loan terms, including low fees and interest.
“This is a good time to check your credit together and make sure you qualify for a personal loan,” says Roman. “Talk about future goals together. If you’re planning to buy a house, be cautious about taking on a large loan before doing that.”
If you don’t have good credit, consider improving your credit score before you apply so you can improve your odds of approval and access better loan terms. If you have at least a month before applying, you could correct credit report mistakes, make on-time payments, pay down debt and add positive credit history to see a quick boost in your score.
Follow these steps to apply for a wedding loan:
- Get prequalified for a personal loan.
- Compare your prequalified loan offers.
- Gather necessary documents, such as your ID and proof of income.
- Complete the application and await approval.
- Review approved loan terms.
- Accept the loan offer.
- Receive funds.
- Begin repayment.
Roman reminds borrowers that when you take out a personal loan, you have to start paying it back after you receive the funds. So even if you’re taking out a wedding loan a year before your wedding, you’ll have to make those payments right away.
A wedding loan can affect your credit score positively or negatively, depending on how you manage your loan. The hard credit inquiry from applying for your wedding loan can cause a small, temporary ding to your credit score. And if you don’t make payments on time, that can hurt your credit score.
On the plus side, adding a personal loan to your credit mix can positively influence your credit score because having different types of credit can improve your credit rating. A wedding loan also gives you an opportunity to positively impact your credit score with on-time payments.
“Your wedding loan can impact your credit for better or for worse,” says Roman. “You may see an initial dip when you apply, likely due to the credit inquiry, but if you have a solid plan to make your payments on time, this could be a good way to build your credit history.”
Taking on debt can affect approvals for other loans, such as a mortgage. Lenders consider your overall debt loan when making lending decisions.
“If you have a low credit score, you’ll pay a lot in interest, so consider whether it will be worth it to pay that loan,” says Roman.
You might need to add a co-signer with good credit to get approved, or get a secured wedding loan that requires collateral. Some online lenders specialize in personal loans for borrowers with bad credit and may offer flexible underwriting criteria. These lenders may consider factors beyond your credit score, such as your bank account balance.
If you find it challenging to keep up with debt payments, it could be a wise move to explore wedding loan alternatives. “A personal loan is not a good idea if the borrower is struggling to make minimum payments on current debt,” says Enright.
If you’re not sure whether a personal loan for wedding expenses is the right move for you, consider these options.
- Scaling back: Cutting nonessential expenses and downsizing your wedding could make it more affordable without a loan.
- Lengthen your engagement: A longer engagement can give you more time to save for wedding expenses or spread out costs over a more extended period.
- Increase your income: Picking up a part-time job or side hustle could funnel cash to your wedding expenses.
- Ask vendors for payment plans: Vendors may allow you to spread your costs over several months.
- Use a 0% credit card: Make on-time payments and pay off your balance before the 0% rate expires, and you can borrow interest-free.
- Register for expenses: Some registries allow you to register for wedding expenses, such as honeymoon experiences.
“When couples are in the planning phase for the wedding, think about needs and wants and how it aligns with future goals,” says Roman. “Does their current budget fall in line with what they want to achieve together?”