How to Use a Personal Loan for Your Wedding

Getting married is a big deal — and a huge expense.

With the average cost of a wedding typically pushing $30,000 according to The Knot, you might be thinking about taking out a personal loan to pay for your fairytale celebration.

Before you get hitched to a wedding loan, weigh the pros and cons to determine if one’s right for you.

What Is a Wedding Loan?

Although there’s technically no such thing as a wedding loan, many couples take out an unsecured personal loan to finance their nuptials. This has given rise to the term “wedding loan,” an expression that’s commonly used by lenders and borrowers alike.

Pros and Cons of Taking Out a Loan for a Wedding

As with any personal loan, the biggest advantage of a wedding loan is being able to pay for your big day over time rather than in a lump sum. Other benefits include:

• Lower interest rates: More often than not, you'll get a lower interest rate using a personal loan for wedding expenses than if you charged them on a credit card.
• Set payments: With a wedding loan, you'll pay the same amount in fixed monthly installments for the length of your contract.
• Numerous choices: Personal loans for weddings are available in a wide range of options and repayment terms from most credit unions and banks, as well as online lenders and other sources.
• Fast cash: Aside from credit cards, a personal loan is the quickest way to get money for your wedding.

Of course, there are some trade-offs to taking out a wedding loan. They include: 

• Long-term payments: Regardless of the specifics outlined in your loan agreement, you’ll be making monthly payments on your wedding long after you say “I do,” which could leave you strapped for cash once your honeymoon (literally and figuratively) ends.
• Additional costs: Interest charges quickly add up and may cause you to pay hundreds, or even thousands, of dollars more for your one-day celebration over the life of the loan.
• Incremental debt: Taking out a wedding loan raises your overall debt-to-income ratio, which can make it harder to qualify for another loan if you need one.
• Overspending potential: With a lump sum of money readily accessible, it’s easy to spend more than you would have if you had to come up with the cash on your own.   

What Does a Wedding Loan Cover?

You can use funds from a personal loan to pay for pretty much any wedding-related expenses. This typically includes:

• Engagement rings and wedding bands
• Pre-wedding parties and showers
• Wedding dress and groom’s attire
• Photography
• Wedding planner
• Rehearsal dinner
• Ceremony (flowers, venue, officiant)
• Reception (venue, food, drink, entertainment)
• Honeymoon

So, from the moment you decide to pop the question until you return from your tropical post-nuptial retreat, a wedding loan can help cover the costs of what has become a major investment.

How Much Can You Borrow for Your Wedding?

Limits for personal loans — including the kind you might use to finance your wedding — typically range between $1,000-$100,000, with repayment terms from one to 10 years. The exact amount you can borrow relies on such factors as:

• Credit score
• Income
• Employment history
• Existing debt
• Loan type

Interest rates also differ among lenders and are largely determined by many of the same variables that affect loan amounts. However, since 2016, rates for 24-month personal loans have averaged between 9.5-10.3%.

Should You Use a Personal Loan to Pay for Your Wedding?

As a rule, financial advisors discourage borrowing money to pay for weddings or any other type of discretionary purchases. The thinking goes that if you have to go into debt — or wipe out your regular savings or tap into your emergency fund — to get married, you’re spending beyond your means.

That said, if you’re set on going all out to celebrate your union and you’d otherwise use a high-interest credit card to make it happen, a wedding loan could be a better (and cheaper) option in the long run. Before heading too far down either aisle, you should take a close look at your finances and ask yourself some serious questions.

How to Get a Wedding Loan

If and when you determine a wedding loan is the best way to pay for your special day, you’ll need to decide whether to apply online or in person. There are pros and cons to each, but the same general steps apply to both.

1. Check Your Credit

Before submitting a personal loan application, you should check the condition of your credit. You’re entitled to a free copy of your credit report, which details your borrowing and repayment history and is used to calculate your credit score.

Meanwhile, your credit score provides a three-digit snapshot (300-850) of your credit history that lenders use to determine how likely you are to repay your loan on time. Since this number doesn’t appear on your credit report, you should get a copy of your credit score so you’ll have a better idea if you’ll qualify for a loan.

If you find that your credit is less than stellar, you may want to boost your credit score before applying for a wedding loan. Improving your credit rating will ensure you get the best rates and most favorable terms.

2. Do Your Homework

Researching traditional and online lenders to compare rates and terms will help ensure you find a loan that meets your budget and needs. You can also plug different rates and terms into a loan calculator to estimate your monthly payments.

When you find a loan and are ready to apply, you’ll need to gather verification documents and other information the lender will use to process your application. This typically includes:

• Proof of employment (pay stubs, bank statements)
• Driver’s license
• Proof of residence
• Social security number
• W-2 forms

3. Submit Your Application

After gathering your paperwork and filling out your application, you’ll submit it and wait for approval. This could take from a few minutes to several days, after which you should receive the loan funds within seven business days or less.

Wedding Loan Alternatives

It’s a lot more enjoyable tying the knot if you’re not running up substantial long-term debt in the process. That’s reason enough to consider one or more of these wedding loan alternatives:

Personal Savings

Cash is king, even when you’re trying to make yourself or your spouse feel like royalty on your special day. That’s why setting money aside in your regular savings or opening a separate account and contributing to it regularly is the best way to pay for your wedding.

Interest-Free Credit Cards

Regardless of how much you have saved for your big event, you’ll likely use credit cards for a few wedding-related expenses at some point. If you anticipate having to pay with plastic frequently, try to find a card that offers 0% financing for a limited time. You can charge purchases on this card and pay it off over 12 to 18 months without interest.

Another option is to look for a credit card with 0% intro APRs on balance transfers. You could charge select wedding expenses (again, not the entire affair) on a current card, and then transfer the balance to the new card, which you could pay down over time without accumulating interest.

Personal Lines of Credit

A personal line of credit allows you to borrow money up to a certain amount over time rather than receiving all of the funds at once. So, if you have to make a down payment on a reception venue or pay for your wedding portraits in advance, you could withdraw cash from your line of credit to cover it. Then, you can repay the debt gradually and only be charged interest on the portion of the loan that you use rather than the entire amount.

Less Expensive Options

Even though you may not want to limit your spending when planning your special day, you need to be realistic about what you can — and can’t — afford. Fortunately, you can trim costs and still have the wedding of your dreams by:

• Picking a date outside the peak months of May-October
• Paring down your guest list to family and close friends
• Printing your own announcements or emailing invitations
• Choosing a more affordable venue for the ceremony and reception
• Using fewer decorations and less expensive flowers
• Limiting your menu and reducing the amount of alcohol you provide

Truth is, there are many ways to rein in your wedding expenses if you’re willing to have an open mind and get creative.

The Takeaway

Personal loans for weddings can be an attractive and convenient way to pay for one of the most important days of your life. However, they’re not for everyone or every occasion.

To determine if one makes sense for you, review your options, choose your loan wisely, and use the funds judiciously.

That way you can look back fondly on the memories you were creating rather than the long-term debt you were amassing.