Wedding loans may help you get the best day in your life with no money problems.
What is a wedding loan?
A wedding loan is an unsecured personal loan, meaning it requires no collateral — something of value, such as a savings account that the lender can repossess if repayment terms are not met. Personal loans can be used for almost any purpose and are a handy way to cover typical wedding expenses, such as photography, venue, and catering.
The amount of a wedding loan is usually between $1,000 and $100,000. It is necessary to make monthly payments with payoff terms from one to seven years. Interest rates are highly dependent on your credit score, and the best rates are reserved for applicants with good credit.
How To Get a Wedding Loan
Applying for a wedding loan is no different than applying for any other personal loan.
You provide personal information and information about your income, lenders check your creditworthiness and income, and then offer you a loan amount and interest rate. Some online lenders offer quotes after a soft credit check, so you can request several quotes without worrying about your credit score.
Is it possible to get a wedding loan with bad credit?
If you have poor credit as defined by FICO (between 350 and 579), you won’t be able to qualify for a personal loan unless you apply with a co-borrower. However, some lenders offer wedding loans to applicants with credit scores as low as 580.
If your credit score is something to be improved, and you’re getting ready to apply for a loan, take the time to improve your creditworthiness first.
Pros and Cons of Wedding Loans
Pros of Wedding Loans:
- As a rule, interest rates for such loans are lower than for credit cards.
- Wedding loans have repayment terms that involve long-term financing (usually between two and seven years).
- It’s fast access to cash.
- This is a flexible approach, and the money received can be spent as the couple decides.
What to watch out for:
- Couples can be in debt for a year or more, depending on the financial situation.
- If couples don’t get approved at a favorable rate, they could be stuck with a high interest rate.
- There may be other fees tied to the loan that borrowers may not initially consider.
How will a wedding loan affect my credit score?
Most lenders offer a pre-qualification process that lets you know what terms you may qualify for without affecting your credit history. However, the formal application process requires a hard credit check, which temporarily drops your score by one to five points.
Although your credit score will drop temporarily, your payment history makes up 35% of your score, which means making on-time payments will help strengthen your credit.
When is it right to take a wedding loan?
If you don’t have a large sum of money available, and you don’t have time to save up enough cash, it may be worth considering a wedding loan.
A wedding loan is typically only a smart idea if you:
- Qualify for a low-interest rate;
- You know you’ll be able to afford to make on-time monthly payments;
- You expect to receive cash as wedding gifts and can use it to help repay your loan.
If you take out a wedding loan, it is very important to do so only if you are confident that you can afford to repay the loan within the agreed terms. If you can’t meet the repayment obligations, it’s not a wise decision from a financial point of view. Failing to repay a loan can lead to serious problems in your credit history and result in additional penalties.