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What You Should Know About Wedding Loans
You have found ‘the one’ and are ready to tie the knot. Here’s some things to consider when planning for your big day when it comes to wedding loans.
Many couples ask themselves how they will pay for their wedding.
Some might put it on their credit cards and think to worry about it later, but this can be a bad idea since they have high interest and it’s not a good way to start your new life together.
In 2020 the typical wedding costs about $30,000 on average, and over half of the newlyweds out there will spend more on their wedding day than they had previously budgeted for.
The actual amount can vary depending on location, season, day of the week and even style. This is just the beginning of how costs can influence the bill too. What is spent on the gown, what is served as a meal, open bar, what is spent on the ring, and let’s not forget the honeymoon. But let’s focus on the wedding costs, and how a personal loan can help.
Personal Loan for Wedding – How to Qualify
If you are considering to take out a personal loan for a wedding, there are a few things you want to consider before you take the plunge.
First and foremost, it’s the borrowers with the better credit that should apply since they would likely receive the lowest rates on a personal loan or wedding loan. A good place to start is for you and your soon to be spouse to check for your latest credit score so you are aware of who might be the better candidate to apply.
If you are surprised by what you see on your credit reports, things like paying your bills on time and keeping your debt to income ratios low are all factors in how your score is calculated. Depending where your score is, you might consider if it’s close enough that you would want to try improving it before applying.
If your score was high 600s (i.e. 660-699) it could be worth looking into how you might improve your credit score since it could save you thousands of dollars in interest fees.
From checking your credit reports for errors or inaccurate data that you can dispute, it can pay significantly in your favor to look prior to shopping around for personal loans. You might also look at having a co-signer or applying for a joint loan.
Should I use a Personal Loan or My Credit Card
In a few rare instances it might make sense to use a credit card to take care of the costs instead of a wedding loan. You should have good to excellent credit, and be very strong when it comes to managing your personal finances.
If this sounds like you, then a 0% APR credit card that does not charge interest on purchases through their promotional period (usually 6 to 18 months) could be an option. Depending on how you plan to spend, it’s possible to also accumulate points with a rewards credit card.
RELATED: Everything to Know About APR
The key to making this work is to pay off your credit card debt and the amount owed during the promotional period, otherwise you’ll have high interest rates (usually 16% of greater) to deal with.