A wedding loan can seem like a godsend to many couples, especially for those in a tight patch, or who are not quite able to make ends meet for the wedding. Many wedding lenders offer loans that arrive within a week, and typically have very little security. For this reason, brides and grooms everywhere are now seeing the wedding loan as a great way to afford the wedding of their dreams, but is it really a good idea? Consider these top ten issues with getting a wedding loan before you apply for yours.
Most loans require security of some sort and whatever yours is, you probably don’t want to lose it. If you have to put your care up for collateral, what happens if you miss a payment? If you already own a house and have to put that up for collateral, can you guarantee that you will be able to pay the loan back? Consider your choices before you put any of your possessions up for collateral because if you lose your job, you may end up losing it.
9. Financial Responsibilities
If you already have financial responsibilities then you may want to think twice about borrowing money. No matter what it is you are currently paying, you have to add the wedding loan payment on top of that, so make sure that you can afford it each and every month. For most couples, that’s a no.
8. Is It Worth It?
A wedding loan can place a lot of stress on a new marriage and loans and debt are still the number one cause of divorce. Can your relationship handle the stress caused by three to five years of debt for a one day party? If you’re planning on taking out the average $30,000 loan, that’s exactly how long you will end up paying it off.
7. The Type of Loan
There are many different types of wedding loans and yours may or may not be a good idea depending on your situation. If you just need a bit of extra money to make ends meet for the wedding and will have it the next week or month to pay off then sure, you can take out a small loan. Bigger loans come in two types, which include loans similar to ‘payday loans’ for instant cash, and bank loans based on collateral. Typically the latter is the better idea because it offers lower interest and better security.
6. Some Wedding Lenders Are Scams
Did you know that some online websites offering wedding loans are actually scams? You should always carefully consider your options and research a company before you apply for a loan. In fact, some loans that actually give you money could be considered scams, mostly because they charge you ridiculously high interest rates.
5. Spousal Agreement
Do you and your future spouse agree about the loan? If not, it could turn into a very tense discussion point, especially when you’re still paying it two or three years down the road. If you do end up getting a loan, make sure that both of you 100 percent agree on it.
4. Total Costs
It is important to consider the total cost of the wedding when you get the loan. This means calculating every cost for the wedding day and the honeymoon so that you can borrow the right amount. After all, it’s pointless to borrow a lot of money only to realize that you’re a few thousand short of meeting your actual goal. Do the math and make sure you have your figures right before you apply. Usually it’s better to borrow too much than too little.
3. A House
Another thing to consider is that if you’re already paying a wedding loan, you might not be able to afford buying a house. In fact, you might not even be able to take out a mortgage until your wedding loan is paid off. Consider your future plans carefully before you apply.
Debt is never a popular topic and in fact, there are thousands of books written on the subject of getting out of it. A wedding loan is a very easy way to get into a lot of debt very quickly. For the most part, debt is stressful, and is actually one of the number one causes of depression. If you think you can handle it then carry on.
1. Interest Rates
Interest rates are another huge issue, especially with wedding loans. Rates vary from a relatively low 3% to a ridiculously high 36%. Make sure that you shop carefully when applying for a loan in order to avoid cut-throat interest rates.