If you are lucky enough to be planning a wedding, you’ll quickly begin to realise the large costs that come with it. Unfortunately, the happiest day of your life will often become the most expensive. Not only is the cost high, but often vendors will require an immediate deposit. Wedding loans, often in the form of unsecured personal loans, are a common tool used by newlyweds to allow them to have the wedding they’ve always wanted. This guide will compare different ways of borrowing for the big day and is essential to make sure you know the finer details of borrowing money for your wedding.
Wedding costs are constantly increasing, with the average cost of a wedding in the UK between £20,000 and £30,000. Your wedding is probably going to be the most expensive event you will ever host, and many couples are turning to loans to help them finance at least parts of it. Newlyweds starting their marriage in debt is not uncommon, but if you compare loans to find out the best option for you it can make it much more manageable, especially if you have a poor credit history.
Using a wedding loan means that you will not have to empty your bank account to finance your wedding. It will also mean that family members such as parents may not feel as obligated to help you pay for it, so they can focus on celebrating the happiest day of your life. Taking out a loan for your wedding will also remove the stress of the day for you, allowing you to focus on planning and preparation. They are particularly useful for couples who do not have the cash on hand straight away, as wedding vendors often require immediate deposits.
As with any loan, short-term relief can cause financial stress in the medium to long-term. The fact of the matter is that generally those who take out a personal loan are spending cash that they do not have. It’s essential that you understand the risks that you are taking on when applying for a loan so that your financial situation doesn’t place strain on your new marriage further down the line.
The most common loan for a wedding are personal loans, often you will see this called an ‘unsecured’ loan. Although they vary, typically these loans allow you to borrow up to £15,000 for up to five years. If you want to borrow between £7,500 and £15,000, your interest will be around 4%, making it a relatively cheap option. Personal loans are certainly the most efficient option if you have the ability to take one out. They are unsecured because the bank does not require you to put any assets up as security. This is because lenders will look at your credit history, and those with the best credit scores will get the best deals.
If you need to take out a loan larger than a personal loan, or have a poor credit history, then a secured loan may be the best option. Secured loans work by putting up large assets (such as a car or your house) as security for the lender. This means that they have the ability to repossess your asset if you fail to make these payments. These are good loans for people with bad credit or those who need a large sum of money. However, because of the bank's ability to repossess, they are incredibly risky and can place a lot of pressure on a marriage that has just begun.
If you need a smaller amount than the ones discussed above, credit cards could be your best option. The majority of credit card suppliers will give you a much longer interest-free period, sometimes up to two years. This means that you can essentially borrow the money free of charge if you are regimented in paying the credit card off. If you do not pay it off in this interest-free period it can become very costly very quickly, so it’s important to keep on top of it. Again, credit cards will often only be available to those with the best credit scores, however there are cards specifically targeted at people with bad credit.
Find out which loans you could be eligible to take out, without affecting your credit score