Nearly $34,000 is the average cost for marriage in the United States, which is fine if you have an inheritance or a wealthy aunt ready to pay for it. That’s an astronomical price tag, though, for many working Americans. Here’s how to shell out for a wedding if you’re wondering how.
A wedding loan is what?
Whatever loan is taken out to pay for a wedding is called a wedding loan. There isn’t such a thing as a marriage loan, strictly speaking. There are several methods to borrow money to pay for your wedding, but there isn’t one particular product category dedicated to weddings.
How do marriage loans operate?
Most loans for weddings are personal. You are getting an individual loan to shell out for your big day, whether you get it from a financial institution, credit union, or internet lender. The lender doesn’t care if you use the money on extensions for your locks, an excursion to Bermuda, and to marry the love of your lifetime because the financing is unsecured.
It starts with a loan application, just like other personal loans do. Every lender is interested in knowing that you can be entrusted to repay the financial obligation and have a solid credit score and history. You agree to repay the loan in return, usually in equal monthly payments. Therefore, you’ll need to know how much you can pay back each month and what amount you want to borrow.
What categories exist?
Individual loan
As indicated, a personal loan is the preferred method of financing wedding debts. If you have good credit, you can get low-interest rates and seven-year loan durations from select lenders. The maximum loan amount varies from a lender – lender and is $100,000.
Many lenders for poor credit specialize in discovering a method to get you financed, even if your credit is awful. Try out the calculator at if you’re curious about how much you pay on a personal loan. It will display the required monthly loan payment with various periods, amounts, and interest rates.
Family loan
Even if you don’t have any money, your parents nor other close relatives could be prepared to lend you some. Although family rates may be cheaper than bank rates, you should be ready to shell out the loan return with interest.
Make a wedding budget before asking loved ones for a loan to show people how you want to make the day of your dreams without going over budget. Show them your repayment strategy for the money you borrow, too.
The warning in this situation is that one should never accept money from somebody withdrawing funds from a retirement or emergency fund to pay on your big day. Try not to overextend or ask others to overextend to finance the big day.
Line of credit for home equity (LOC)
Consider a home equity extension of credit (HELOC) if you or the prospective homeowner own your residence. Because it serves as a line of financing, you can only borrow the amount you need while using your house as collateral. You are not required to accept the funds all at once. What most HELOCs do is as follows:
- Your home’s equity is taken into account by the lender. For instance, you possess $100,000 in equity if the house is worth $250,000 but borrows $150,000. Typically, in this situation, they will lend up to 85% of the home’s equity, or $85,000.
- Then, for a predetermined amount of time, often ten years, you can withdraw money from the line of credit up to that sum. Once any HELOC repayment has been made within that time, you can withdraw any remaining funds as needed.
- Depending on the loan, you will have ten or maybe 20 years to repay those payments.
The positive aspect is that because a lender has your property as security, they will likely provide you with an attractive interest rate. The negative aspect is that they can reclaim the property if you default on your loan payments.
How to pay for a marriage
Calculating the cost of your wedding is the first step in figuring out how to pay for it. You’ll need to create a thorough wedding budget that accounts for factors like the location of your wedding and the number of guests you wish to invite.
Consider the amount you can spend in cash when you have an idea of the approximate costs.
Here are a few critical measures to remember while applying for wedding loans to make the procedure simpler:
- Improve your credit rating. Pay off debt and be current with all bill payments. Investigate your credit reports. The “big 3” credit monitoring organizations should provide copies of your report, which you should carefully review. If you identify any errors, raise them with the relevant agency.
- Compare lending rates. Search for the best loan terms and interest rates. Credit reporting companies will record all loan requests as a difficult credit check if you browse within a brief time (aim around two weeks or less).
- Check the small print. Make sure you’re receiving the greatest price available by carefully reviewing the terms of each lender’s offer.
- Budget sensibly. Only take out loans that you can afford to repay. Not overwhelming debt, but wonderful memories of your wedding should be the focus.
- Credit cards. The first thing students would learn in a course like “How to Finance a Marriage 101” is that using credit cards to pay for the ceremony and reception is risky.
Consider using a 15% interest rate credit card to pay $10,000 of your wedding’s expenses. Even with $225 monthly payments, it will still take sixty-six months to pay off the card fully. You must be assured that you can pay down your debt before interest is charged, even if you use a credit card with a 0% initial APR.
Cash
Marriage comes with unique difficulties, such as figuring out how to juggle two separate lives. Even if couples have shared a home, being married alters the dynamic of your relationship.
At best, adding indebtedness to the equation is risky. If everything went as planned, you would have enough money to pay for the ceremony and reception and start your new life alongside one less financial strain.
Family involvement
It’s possible that you are unable to cover everything alone. Why not enlist the help of your parents and grandparents? You might be able to make arrangements for the remaining half in cash or at the very least, postpone the wedding long enough for you to show up with your portion, provided that you don’t increase your budget correspondingly.
Hybrid
Decide what you can afford right now without taking out a loan. Do you have at least $1,000 in cash not designated for an emergency fund or another critical purpose? Have you been carrying a credit card with a 0% introductory rate that you may use and pay off when it expires?
Could you contribute an additional $50 each month to your wedding fund? Rubik’s cube-style movement of the financial parts is encouraged. You won’t need to borrow as much money if you can collect more.
Everyone who has been happily married for a long time will tell you this: a solid partnership is based on many different elements, such as trust, respect, and having similar goals. After many years of marriage, no one has ever declared that being married was the finest thing about staying together.
If your main concern is how to pay for a wedding, the odds are good that you are already under stress. Why not be kind to yourself and plan your wedding based on your financial capabilities? People that love you will celebrate with you.
As long as you are responsible about how you pay for your dream wedding to come true, you won’t have to worry about starting your married lives off stressing due to finances. That will surely benefit you and your new spouse, as you’ll have plenty of other obstacles to overcome together throughout the years.
Try saving before any form of borrowing, and it will help you to keep your solo and joint accounts out of the red and help you refrain from financial woes becoming problematic for your lives. The point of combining your finances and lives is to work together toward a common goal.
Be certain that you and your spouse are on the same page regarding wedding planning, and try to save where you can to avoid any issues arising from the financial stresses of having a wedding celebration.