The Definitive Guide to Wedding Loans

Linsey Knerl

Money Talk,

Congratulations! You’ve decided to tie the knot and share your life with that special someone, which may lead to some intense – and expensive — wedding planning over the next few months. If you’re among the 72% of engaged couples represented in a recent The Knot survey, you may be finding the financing of your big day to be more overwhelming that you had originally planned.

This should come as no surprise, given that the current average cost of a wedding is $33,391 (not including the honeymoon.) So, how do you plan on paying for it? One increasingly popular option is a wedding loan. There are some distinct advantages to paying this way if you know what you want.

Here are some considerations for the modern couple looking to get the best buy for their matrimonial dollar, including:

  • What is a wedding loan?
  • How do you decide if you need a wedding loan?
  • What are your financing options?
  • Is a wedding loan right for you?
  • What should you expect when applying for a wedding loan?

What is a Wedding Loan?

A wedding loan is  a personal loan used towards wedding expenses. Funds from a personal loan can be used for almost anything. In fact, any funds leftover from your wedding can be used for whatever you choose; some may put it toward moving costs or paying off credit cards, for example. Personal loans are also unsecured loans, which means you don’t have to risk your car or home as collateral.

How do You Decide if You Need a Wedding Loan?  

If you can afford to pay for your wedding with cash or liquid savings, that’s generally much better than taking out debt to do so. In general, living within your means is important to long-term financial stability. However, wedding expenses often happen all at once and not everyone has that sum of cash easily available, even if they would over time.  Vendors, rental facilities, and even the dress require at least a partial deposit before the big day, with the balance paid in full upon delivery of goods or services. A wedding loan may help as a “payment plan” to distribute the costs over a longer period of time.

Having enough cash on hand can help you pay for many of the goods and services upfront, giving added flexibility to your plans. Many small wedding suppliers and services are happy to offer discounts to those who can pay with cash. Since a wedding loan isn’t secured with collateral, you don’t need to put your car or home title at risk to make sure your wedding is perfect.

What are Your Financing Options?

A personal loan isn’t your only option for getting access to cash Couples have also considered credit cards to carry some (if not all) of the purchasing power needed to get down the aisle. Credit cards are a flexible option that come with the added benefits of some purchase protections. However, they also often have high rates, fees, and other harmful features that we discuss below. (To get the the same protections with funds from a personal loan, you can always deposit that money into an account attached to a qualifying debit card with bank-guaranteed protections.)

Other couples turn to the bank of “mom and dad,” a more traditional, albeit fading, option for many of today’s engaged pairs. With so many parents struggling to save for their own retirement, it may not be feasible to expect them to also pitch in for a wedding.

Home equity loans are becoming a popular choice for meeting budget shortfalls, but what are the risks? Unfortunately, many new couples don’t own homes yet. Given that people who would qualify for a home equity loan are likely to also qualify for a personal loan, it may be wiser to skip bringing a home into the equation and avoid risking a most valuable asset as collateral. (Personal loans, remember, require no collateral and are still the safest option for those wanting to protect their assets.)

Is a Wedding Loan Right for You?

Personal loans are considered to be less risky by borrowers for a number of reasons. At a time when you are starting out in a new chapter in life — marriage — it may not be desirable to put your finances at undue risk. That’s why the following personal loan perks are especially appealing to newly married couples wanting to start their financial journeys out right.

Stable Interest Rates

For those with stellar credit, a credit card may seem tempting. However, even if you manage to qualify for a great intro rate on a credit card, these are only temporary (usually 12-18 months, at the most). After this promotional offer, rates can go up either at the whim of the credit card company or due to  macro changes to interest rates. That’s why many couples who hope to be wed within budget are finding it sensible to borrow for a wedding at locked-in rates. As long as payments are made in a timely manner, rates will stay the same for the life of the loan agreement.

For example, one of the most popular “0% interest” rate credit cards only offers that rate for the first 15 months. After that, the rate jumps to 16.49% and could go to 25.24% depending on your credit history. And if you want a cash advance to pay a vendor, that gets immediate charged at 26.49%.

Debt Gets Paid Down

Another unquestionable advantage is that personal loans for weddings are based on a specific loan amount, for a specific repayment period, at a standardized interest rate. Credit cards, on the other hand, have no set period for repayment, since they can be continuously charged up again each time you pay off some of the balance. They also have the possibility of an ever-increasing interest rate – something that can make them hard to pay off promptly. It’s far easier for a new couple to estimate monthly expenses with the static and predictable payments that come with personal loans.

Early Payments are Allowed — and Encouraged!

While it can be tough starting out as a young couple, responsible financial habits can free up more money for your most important goals. If paying down debt is a primary target for early in your marriage, you may want to start with those accounts that have the highest interest rate. Another strategy is to pay off the smallest balances first, leaving you with fewer accounts to manage. Whichever method you choose, some wedding lenders won’t penalize you for making payments larger than the minimum required and getting your balance down to zero earlier in advance of the final, scheduled payment date.

Easy to Check Your Rate

At Upstart, finding out how much money you qualify for is easier than ever. By sharing just a few basic details, you can see your wedding loan amount and interest rate. This will only cause a “soft” inquiry to appear on your credit history, which won’t drop your score and is a safe way to see if you qualify. (Your credit history will only show a “hard inquiry” once you complete the loan application process and accept your funds.) On the other hand, all applications for credit cards come with hard inquiries to your credit report, regardless of whether or not you get approved for the card.

What Should you Expect When Applying for a Wedding Loan?

If you’ve applied for any kind of personal loan before, be it for a vehicle, medical expenses, or to repair your home, you’ll find that the process for a wedding loan is very similar. It pays to have everything in order before you apply, as well as to be familiar with the basics of a new loan.

Who Should Apply?

Since a personal loan is tied to an individual (not a couple), it may make sense for the person who has the better credit profile to put the application in their name. What makes the better candidate? Look for these indicators:

  • Higher overall income
  • Lower credit card and revolving debt payments
  • Higher credit score
  • Longer credit history

What Do You Need to Submit?

Not all lenders or lending platforms have the same process for applicants, but most will ask the same general information. At Upstart, you may be instantly pre-qualified for a wedding loan within two minutes when you provide information such as the following:

  • Name, address, and phone number
  • Education history, including college attendance
  • Annual salary

If you meet Upstart’s criteria, you’ll be shown the terms of the loan you qualify for. You can then compare across lowest APR, lowest monthly payment, shortest loan duration, largest loan, and other factors to find the loan that meets your specific needs.

How Long Does It Take?

Personal loans used to take all afternoon in a banker’s office. TImes have certainly changed! Now, applications can be processed, and approved or denied in minutes online.  If you qualify and accept an Upstart wedding loan, you can get your funds the next day. [If you accept your loan by 5pm EST (not including weekends or holidays), you will receive your funds the next business day. ]

The Best Option for Your Special Day

In the end, deciding which financing solution works best for you may be as personal as choosing between the chocolate or red velvet cake. Long after the wedding festivities, however, the financial product you end up going with will have an impact on the first few years of your married life and will be something you think about at least monthly — when the repayment bill comes due. Regardless of whether you choose a stable wedding loan or something else, the decision should be made with your partner’s input.

This loan will be something that gets added to your portfolio of debt and will require both of your hard work to get it paid down in a timely and responsible manner. Picking a loan product that makes it easy to pay is also important. (Upstart’s intuitive payment dashboard lets you know how much you have left on your loan and you’re never penalized for making bigger payments than required.)

With the ease and simplicity of online loans, you can get funds for your wedding without a laborious process.  That way, you can focus on figuring out where Aunt Maisel should sit at the reception dinner!