Curve

Should you get a personal loan for wedding expenses?

Erik J. Martin
The Mortgage Reports contributor

You and your sweetheart have agreed to tie the knot and have set a wedding date. But you’re quickly learning that weddings are expensive. In fact, the average cost to get married today is nearly $39,000. Where are you going to come up with that kind of scratch? The answer may be a personal loan for wedding expenses.

A personal loan can come in handy, helping to cover all kinds of wedding-related costs. It can be easier to qualify than other kinds of loans. Plus, you’ll probably get the cash fast. Yet it’s not the only funding choice you should be considering.

Crunch the numbers and forecast your ability to repay a personal loan on time. You may want to say “I do” to this option before saying “I do” at the altar. But be sure to check out several financing options first.

Check my rate for a personal loan up to $100k * (Sep 16th, 2019)

*TheMortgageReports and/or our partners are currently unable to service the following states – MA, NV

A personal loan can rescue your wedding

Wedding costs add up fast. You’ll likely book a banquet facility. A DJ or band can be costly. Flowers and photography don’t come cheap. The wedding dress alone can be thousands of dollars. And your honeymoon is likely to put a dent in your savings.

If you’re like most people looking to get married nowadays, you’re probably young. That means there’s a high likelihood you have student loan debt. Maybe you’ve also recently taken out a mortgage loan to buy a house, too. You wish you earned more to pay for a lavish wedding. But the truth is, you likely need to a financial helping hand.

Unfortunately, you may not have earned enough equity in your home to pursue a home equity loan or line of credit. And you’re hesitant to ask friends or family to lend you extra money. So where can you turn? Consider a personal loan.

“While we would never advise anyone to spend beyond their means, if you have good credit a loan can be used for anything and everything wedding-related. That includes the bridal gown, flowers, catering, venue, band, rings, and honeymoon,” says Kristin Shuff, senior vice president of marketing with LightStream.

How personal loans for weddings work

A personal loan, sometimes called a signature loan, is an unsecured loan. With this kind of loan, you don’t need physical collateral—such as your home—to secure repayment. Instead, the lender commonly only requires your signature and pledge to repay the loan.

“Since personal loans are unsecured, the purpose for the personal loan is not as important,” says Risa Dimacali, Certified Financial Planner with Novi Money.

Fortunately, it’s fairly easy to qualify for a personal loan for wedding expenses (more on qualifying to follow). Best of all, you might get the money within a matter of days.

But there’s a catch: A personal loan is considered riskier for the lender. That’s because no collateral is needed. Hence, they may charge a higher interest rate on a personal loan than they would for a secured loan like a home equity or auto loan.

What’s more, personal loans may put your credit score at risk. That’s true if you don’t pay back the loan on time or abide by the terms of the loan. If your credit score drops, that may make it tougher to get other types of credit in the future.

Check my rate for a personal loan up to $100k * (Sep 16th, 2019)

*TheMortgageReports and/or our partners are currently unable to service the following states – MA, NV

Good candidates

You, your partner, or the two of you jointly can apply for a personal loan. But it’s important to know what’s required first.

“Typically, you need a good credit score and a rather clean credit report. You need proof of consistent income that can support the monthly payment. And ideally you need a lower debt-to-income ratio,” explains David Bakke, financial expert with Money Crashers.

The partner with the better credit score/history and higher/more stable income should apply. Better yet, both of you should apply jointly, unless one of you has a poor credit score.

“If you apply for a personal loan in joint fashion, your chances for success are usually even better,” Bakke adds.

Dimacali says the most crucial thing to consider is your ability to repay the loan.

“Will it add to your debt burden? Will it get in the way of other financial goals like buying a house or car?” asks Dimacali.

Before applying, check your credit score.

“If your score has fallen to a lower credit number, you might need to take steps to improve it. Otherwise, you risk being saddled with higher interest rates and fees by the lender,” cautions Shuff.

Brick-and-mortar banks, online banks, credit unions, finance companies, and private lenders offer personal loans you can pursue.

“It’s smart to comparison shop among these sources for the best interest rates,” Dimacali suggests. “You can minimize hard inquiries and protect your credit score by making sure all of your loan applications are within a short period of time.”

Other options to consider

Be forewarned: Despite your best efforts, you may get turned down for a personal loan for wedding expenses.

If this happens, don’t panic. A couple alternatives to consider are applying for a home equity loan or HELOC—assuming you own a home with enough accrued equity. Or, you could opt for a cash-out refinance of your mortgage.

“Another alternative is to ask friends or relatives for a personal loan. They may be more willing to help if you explain that the funds are for your wedding,” Bakke says.

The experts advise against using credit cards to fund your big day. That’s because credit cards often charge the highest rates of interest if you can’t pay off your balance in full each month.

If you can’t borrow the money you desire, try lowering your wedding costs instead.

“Try negotiating expenses with your vendors when possible. Consider a smaller guest list. And think about having the wedding off-season or on a weekday,” recommends Dimacali.

Novi Money recently polled married couples. When asked what they’d to do save money if they got married again, nearly 21 percent said they’d have a smaller guest list; 18.3 percent revealed they’d elope; 14.7 percent would choose a smaller wedding party; 48.5 percent felt a wedding planner cost too much; and 36 percent said wedding favors or a videographer aren’t worth the costs.

Check my eligibility for a personal loan up to $100k * (Sep 16th, 2019)

*TheMortgageReports and/or our partners are currently unable to service the following states – MA, NV