Should You Use a Personal Loan to Pay for a Wedding?

[Jun 16, 2009.]

 

Many couples wrack up huge bills when tying the knot. The average cost of a wedding in the U.S. is $20,398, according to the Wedding Report. In some cases, people turn to personal loans or credit cards to pay their expenses. Here are some things to consider before using a loan for a wedding.

Wedding Loans

U.S. couples aren't the only ones relying on loans for their nuptials. In the U.K. there were an estimated 13,600 personal loans totaling 113 million pounds ($185.5 million) borrowed for weddings during the first four months of 2009, according to Sainsbury's Finance, a U.K. bank. Wherever a couple lives, a personal loan could help with planning the wedding of their dreams. Here are three pros for using a loan:

• Using an unsecured personal loan for wedding expenses means that there won't be any collateral involved. So there won't be any risk of losing a home, vehicle, or other property if the couple is unable to pay the loan back.


• A loan can allow a couple to invite more guests if they have the money to rent a larger reception hall or purchase more food.


• A personal loan can help couples stick to a budget by not spending more than what they've borrowed.

Debt and Loans

While using a personal loan for a wedding may seem like the ideal solution, it's important for couples to look at their whole financial picture when deciding whether to go this route. Financial problems are huge contributors to marital discord and often lead to divorce. Here are some cons to using a loan to pay for a wedding:

• Couples who are already carrying a lot debt from credit cards, auto loans, or student loans should avoid taking on more debt that they can't really afford. This can help spouses avoid stress and conflict over money during their marriage.


• Unsecured personal loans will usually require borrowers to have good credit. Borrowers who don't have high credit scores might qualify for a loan, but will end up paying a higher interest rate.


• Couples may still be paying for their big day many years after taking out a loan if they can't afford to pay it off quickly.

A wedding will only last for one day, so it's important to decide whether it makes sense to go into debt for this occasion by using a personal loan or scale back the party. Couples who want to investigate getting a  loan can begin their search now.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.