Your Guide: Using A Personal Loan For Wedding Expenses

In 2023, the average cost of a wedding was $29,000. Based on surveys of nearly 7,000 couples planning to get married in 2024, wedding expenses have ticked up even higher – to around $30,000 on average. Affording this kind of life event can be challenging, which leads some couples to look into the possibility of getting a personal loan for wedding expenses.

Let’s explore how to use a personal loan for a wedding, weigh the pros and cons of this option and check out a number of wedding payment alternatives.

What Is A Wedding Loan?

Really, there’s no loan that’s specifically for a wedding. But personal loans are flexible – lenders generally allow borrowers to use the funds from a personal loan for just about any purpose. This purpose may be honeymoon expenses, engagement rings, home improvement projects, debt consolidation or unexpected emergencies, to name a few.

Personal loans are typically unsecured loans, meaning they don’t require collateral. Loan payoff terms vary by lender and by a borrower’s financial situation. Typically, personal loan amounts range from $1,000 to $100,000 and carry a fixed interest rate.

Personal loans are available through several types of financial institutions, including banks, credit unions and online lenders.

How Wedding Loans Work

Typically, a lender will review your loan application and creditworthiness to determine whether they’ll approve you for a personal loan. If they do grant approval, they’ll also determine your loan terms. As part of the approval process, a financial institution will typically examine your credit score, debt-to-income ratio (DTI), income and desired loan amount.

Applicants might also need to pay an origination fee.

In some cases, you may be able to get approved on the same day and have cash in your bank account within 7 business days.

Are Wedding Loans A Good Idea?

No different than with any other type of loan, whether a wedding loan is a shrewd choice for you will depend on the nature of your financial situation. Ask yourself these questions:

• Can I get a low interest rate on a personal loan?
• Am I certain that wedding guests will give cash as a gift?
• Are my finances solid enough to pay the loan back on time?

If you can answer “yes” to these questions, a personal loan for a wedding can be a great idea.

But if you fail to pay your monthly installments, you can harm your credit score in a significant way. If you’re concerned about being able to afford the payment, it might be best to reconsider the size and scope of your wedding so you can avoid the potential for long-term financial damage.

Wedding Loan Pros And Cons

Now, it’s time to delve into the upsides and downsides of wedding loans.

Pros Of Wedding Loans

• You can get a personal loan quickly.
• You’ll receive a lump sum of money.
• In most cases, the interest rate and monthly payment are fixed.
• On-time payments can strengthen your credit score.

Cons Of Wedding Loans

• Armed with extra cash, you might increase your wedding budget when you’d be better off keeping it smaller.
• A personal loan may have a repayment term stretching as long as 7 years.
• Without a good credit score, you’ll likely face a high interest rate.
• Paying back a loan can create financial stress, especially when you have other debts.

How To Get A Loan For A Wedding: 7 Steps

If you’ve decided to pursue a personal loan for your wedding, follow the steps outlined here:

1. Research your credit score and attempt to raise it, if needed. If your credit score isn’t classified as “good” or “excellent,” you can take steps to boost your score before you apply for a loan.

2. Gather your documents. You’ll need documents that verify your income, home address and personal identity. Be sure to have your Social Security number handy, too.

3. Prequalify. Prequalifying lets you see what loan terms are available for your credit score and financial situation. Becoming prequalified with multiple institutions can help you find the best terms. Lenders will typically run a soft credit check at this point.

4. Consider a co-signer. If your credit score is on the lower side, pairing up with a co-borrower or co-signer may help you land better loan terms.

5. Evaluate the terms. If you receive a loan offer from multiple lenders, check terms such as interest rate, term length, late fees, monthly payment amounts and prepayment penalties to see how they differ from one lender to the next.

6. Consider the lender’s reputation. Ensure that your lender has a good reputation for responding to borrowers’ concerns and questions.

7. Submit your application. Once you’ve settled on a lender, just follow the institution’s application process. The lender will likely need to do a hard credit inquiry at this juncture.

Alternatives To Wedding Loans

Accessing a personal loan isn’t the only way to pay for a wedding. Next, we’ll take a peek at a few other ways you might consider.

Credit Cards

Depending on the interest rate, a credit card can be a viable alternative to a personal loan. Compare your credit card’s rate to the rate that’s available for a personal loan.

Also, consider the rewards your credit card offers. For example, cash-back credit cards might lower your costs.

If your current credit card doesn’t offer rewards, has a high interest rate, or both, perhaps consider applying for a new card. You might be approved for a credit card with a low introductory annual percentage rate (APR) and some cash-back rewards.

Home Equity Loan Or Cash-Out Refinance

If you plan to continue living in your current home after your wedding, a home equity loan or cash-out refinance could be worth considering. Since home equity loans and cash-out refinances are secured loans, your interest rate will likely be lower than your rate with a personal loan. You’ll need to factor in closing costs, though.

Savings Accounts

If you have a long time between your engagement and your wedding, you might be able to save up for your wedding. Talk with a representative from your bank about opening a high-yield savings account or certificate of deposit (CD) account.

Prioritizing

While planning for a huge wedding can be fun, it can also induce stress. Consider the size of your guest list, the cost of your wedding venue and your catering budget. Weigh these expenses against your income, your monthly debt payments and any anticipated future financial endeavors – such as buying and owning a home – that involve spending a lot of money.

Wedding Loan Interest Rates And Terms

According to data from the Federal Reserve in December 2023, the average APR on personal loans was 12.17%. Some lenders offer a better interest rate to borrowers who agree to automatic payments from their bank account.

As loans increase in size, the interest rate will also increase in many cases. Bad credit can likewise raise your rate.

FAQs About Personal Loans For A Wedding

Want to learn more about the topic of using a personal loan for a wedding? See the answers to the frequently asked questions below.

Can I use a personal loan for a wedding?

Personal loans can cover a vast array of expenditures, which include weddings and honeymoons. Lenders are typically flexible about how borrowers can use a personal loan.

How much of a loan can I get for a wedding?

Generally speaking, personal loans are no smaller than $1,000 and no larger than $100,000. Of course, that means they can also fall somewhere in between. Lenders often charge a higher interest rate the larger the loan since larger loans are inherently riskier to underwrite.

Which loan is best for a wedding?

The best way to pay for a wedding will vary from person to person and couple to couple. In short, it will depend on the personal finances of those involved. Your income, debts owed and credit score will be among the most important factors. Using a credit card or dipping into a savings account might sometimes make more sense than going the route of a personal loan.

Where can I get a wedding loan?

Many financial institutions offer personal loans that you can use to fund a wedding. Check with your current bank or credit union, as well as online lenders.

Can I use my credit card to pay for a wedding?

Many couples use credit cards to pay for their wedding. If you use a credit card for wedding expenses, make sure the card has a lower interest rate than you would find with a personal loan.

How long will it take to get a wedding loan?

It’s possible to be approved for a personal loan as quickly as the next business day. You can often get your loan funding in no more than 7 business days after approval.

The Bottom Line

An unsecured personal loan can allow you to afford your dream wedding. However, it’s imperative that you make loan payments on time to protect – and maybe even improve – your credit score. Carefully compare loan options from prospective lenders to make sure you can meet your financial obligations and do so as comfortably as possible.

If you believe a personal loan is a good fit for you, you can reach out to our friends at Rocket Loans℠ today.