The Pros and Cons of Wedding Loans

You’re planning your big day. You’ve picked a wedding venue, got the guest list ready, and are eyeing up your dress. But how are you covering the bill?

With a typical Kiwi wedding costing about $30,000, it’s not always easy for people to find the cash upfront.

That means some choose to take out a loan to pay for their wedding day. There can be both advantages and disadvantages to this.

Here are a few things to weigh up.

What is a wedding loan?

A wedding loan is a type of personal loan used to pay for the cost of a wedding.

It is usually taken as an unsecured personal loan, which means you don’t have to put up any security to borrow the money.

You can use this loan for any aspect of your wedding, from your venue hire to your catering, your wedding dress or even your honeymoon.

Benefits of wedding loans

A wedding loan will give you the money you need to pay for your wedding. The money can usually be accessed relatively quickly, so there’s no waiting around while you get the cash together to cover your wedding bills. A loan can make your wedding happen when you want it to. This can be extra important if other things in your life mean your wedding needs to happen within a certain timeframe.

• There are usually no restrictions on what the money can be used for. You’ll be approved for a certain amount, and from there, it’s up to you how you use that.

• Wedding loans can be a good alternative to credit card debt because the interest rates on a personal loan, even when it’s unsecured, can often be lower than a credit card.

• Taking a wedding loan can mean you don’t have to ask your family or friends for money to pay for your big day, and you don’t have to trim your dreams to fit a budget based on what’s in your bank account right now.

Risks and drawbacks of wedding loans

There are some things to think about, though.

Because weddings can be quite expensive events, and there is often a lot of emotion involved in the planning, you may need to borrow a significant sum of money. It will be important that you make sure that you can cover the repayments comfortably.

If you have other financial obligations looming, for example, a new baby on the way or a house purchase, you might find the wedding loan becomes an additional commitment that you’d rather not have. If you think your circumstances will soon change, this is important to take into account when you work out whether a wedding loan is right for you.

A loan can affect your credit score and financial stability, although if you manage it well, it can also improve your credit rating.

The interest rates may be a little higher because the personal loan is likely to be unsecured, which means less surety for a lender that the full amount of the loan and interest will be repaid.

How do you get a wedding loan?

At better finance™️, we can help you apply for a loan for your wedding costs.

We’ll guide you through each stage of the process, which can be helpful when you have wedding planning on your mind.

When you apply through better finance™️, you’ll need to get your documentation together at the outset showing things like your proof of income, your proof of identification and address.

We’ll talk to you about the interest rates you might be charged and the fees and charges that will apply.

We will also work through the repayment terms with you to ensure that you can manage the debt over the term of the loan and that it doesn’t become a financial headache.

Managing your wedding debt

When you have a wedding loan in place, there are a few things you can do to make it easier to manage.

• Prioritise your repayments. Paying off your loan as quickly as your budget and the terms of your loan allow will likely save you money over the long term.

• Make your payments on time. Set up the payment to go from your bank account the day after your pay arrives so that you know there will be money there to cover it.

• If you have other debt, you might consider consolidating it into one loan to help reduce the admin and potentially save you money.

Wedding financing advice from the experts

Here are some top tips to help make your wedding finances as smooth as possible.

Budget

It’s so easy to spend more than you intended to on something as important as your wedding day. Set a budget from the outset of what you’d like to spend and where you want to allocate your budget. Talking about your priorities together will help.

Consider alternatives

If you have family members or friends who are happy to help, you may find this is another way to fund some or all of your wedding.

Keep an eye on your future

Your wedding is exciting, but your life beyond that is important, too. Take care not to take out loans that are bigger than they need to be – you want your early married years to be fun and happy, not spent worrying about meeting debt repayments.

Conclusion

A wedding loan could be a great way to get you to your dream day. But there are a few things to think about, and, as with any borrowing, it’s something that should be entered into carefully. If you have questions about wedding loans or just want to get started, get in touch with the better finance™️ team.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion, and seek independent guidance.