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It’s no secret that getting married can be an expensive endeavor. The average cost of a wedding in the U.S. is $33,000, according to The Knot’s 2017 Real Weddings Survey. And that’s not even counting the honeymoon! In order to afford the big expense, many couples consider the idea of taking out a personal loan in order to finance their beautiful wedding. In fact, a recent study by Student Loan Hero found that 74% of couples planned to borrow money for their weddings. Here are a few tips to consider when thinking about taking out a loan.
Interest rates are a big factor in taking out a personal loan for a wedding. It’s important to remember that taking out a big chunk of money to pay for a single-day event with a loan that could take a few years to pay off. As an example, a $32,000 loan at an annual percentage rate of 7.5% will take 4 years to pay off with a minimum payment of around $800 a month. And, keep in mind that these terms only apply to borrowers with an excellent credit history. Be sure to research the best online loan companies so you know you’re selecting a loan provider with the best terms for you.
Spending big on big weddings establishes spending expectations that can be outlandish. This attitude means you might opt for more expensive caterers, DJs, venues, outfits, decor, etc. in order to have your wedding feel like “the best.” The bigger your wedding is, the bigger the loan you will have to take out and the more interest you will have to pay off over the years – which is essentially just an add-on cost that doesn’t actually cover any expenses of your wedding. Consider whether a destination wedding better fits your budget.
In addition to the wedding, the honeymoon is also a huge expense! You want to make sure you have money left over to plan a trip that will feel great for you both and may be tempted not to cut any corners on it. But there are ways to enjoy your honeymoon and have a fantastic time without pulling out all the stops and staying at the most expensive resorts, flying first class, etc. Make sure you don’t blow everything on your wedding so you can still afford a nice honeymoon.
Taking out a big loan to pay for a wedding can have a long-term impact on your financial future because you will be paying off monthly loan and interest payments for years to come. Keep this in mind as you make your decision because if there are other factors, such as job changes, moves, kids, etc. you want to make sure you’re able to budget for those as well.
Taking out a loan can help you pay for your wedding day, but make sure to consider the big picture of how it will affect your finances before you commit to the decision.