Should You Take Out Loans to Pay For Your Wedding?

A table at a wedding reception with centerpieces and folded napkins

What’s one word you’d use to describe weddings?

Some might say “romantic.” Others might say “expensive.”

Unfortunately, getting hitched can cost some serious dough, especially if you have your heart set on a large reception with a few hundred of your closest friends and family members. The average American wedding costs $35,000 these days, as much as a new car.

This trend has led to a rise in so-called “wedding loans.” They sound tempting, but are they a smart financial move?

What are Wedding Loans?

A wedding loan is a personal loan that you can use to cover the expenses of getting married. It doesn’t have any special characteristics—you don’t get a break on the interest rate or monthly payments just because you’re spending the money on a magical experience. But lenders are smart enough to brand the debt “wedding loan” to make the debt sound more appealing.

Generally, a wedding loan is an unsecured installment loan in a specific amount, like $10,000 or $20,000, that you pay back over time. You don’t have to put up any collateral for it. Here’s what you can expect:

  • Monthly payments
  • A payback term ranging 12-96 months
  • A loan amount that includes the principal amount borrowed plus interest
  • An interest rate based on your creditworthiness

Pros and Cons of Wedding Loans

More than anything else, a wedding loan gives you a fast and easy way to borrow the money you need to cover wedding expenses. This is important for couples or their families who don’t have the discretionary income to pay for an entire wedding up-front and are willing to make regular monthly payments over time instead.

Other benefits of using a wedding loan include:

  • You can apply online and receive results quickly
  • Some lenders make funds available in one business day
  • Interest rates are lower than most credit cards
  • Steady monthly payments will boost your credit score over time

Of course, borrowing a large sum of money always comes with downsides. The most significant con to consider is that a wedding loan forces you to start your marriage by not only committing to each other but by committing to a huge debt repayment as well. Worse yet, you’ll find yourself paying $200 or $300 a month for years to cover the cost of one single night or weekend.

Wedding loans can also tempt brides and grooms to spend more than they can afford. What seems so important in the heat of the wedding planning, like an unlimited open bar or the extra deluxe photography package, doesn’t feel as important three years later when you’re still paying it off.

Lending Options

Wedding loans and personal loans are easy to find online. All banks, credit unions, and countless online lenders all offer these unsecured loan options. Depending on the lender you select, you may qualify for up to $100,000.

Make sure you read the fine print. If you select a $20,000 wedding loan with a 7.39% interest rate over a five-year term and a 3% origination fee, you’ll end up making monthly payments of $400 over the next 60 months. In other words, the $20,000 you borrowed for your wedding will cost you nearly $24,000 overall and force you to cough up $400 every month for the first five years of wedded bliss.

It could be worth it, but it isn’t always. Talk about it with your soon-to-be spouse and consider other options, like trimming your guest list, renting a wedding dress, or using DIY decorations, before committing to a wedding loan.

The truth is that wedding loans are simply personal loans geared toward soon-to-be newlyweds who need help in financing the special day of their dreams. If this sounds like you, make sure you do your research and consider the pros and cons before taking on debt at the start of your marriage.

Read more on How to Have a Budget Wedding