Despite the outpouring of unsolicited advice that might have some engaged couples feeling otherwise, there’s no “right or wrong” way to plan your wedding. This is especially true when it comes down to everyone’s least favorite topic: paying for it. Whether you have family members chipping in or you and your partner are paying for it yourselves, each couple’s personal financial situation is different. So while some brides and grooms use cash or credit cards to cover the fees, others turn to loans in order to cover the cost of their nuptials.
What Are Wedding Loans?
Wedding loans are an option to help finance weddings through alternative means rather than relying on high-interest rate credit cards or using all of your liquid cash.
Financial advisor Yalitza Brambila explains that wedding loans are essentially personal loans because the money can be used for anything. “Calling it a ‘wedding loan’ is a way to get people thinking about the option of financing their wedding,” she explains.
Meet the Expert
Yalitza Brambila has been a financial advisor at Northwestern Mutual for over three years.
Ahead, discover everything you need to know about wedding loans, from how to get one to the pros and cons.
How to Take Out a Wedding Loan
Couples who realize the cost of their wedding exceeds the amount of money they have saved or the financial help available to them might consider taking out a wedding loan. Although they can apply for this type of loan at any point during the planning process, Brambila reminds them to keep in mind that you have to start repaying the loan as soon as it’s taken out. Therefore, she advises brides and grooms to wait and use their liquid cash to pay for everything they can first before turning to a wedding loan in order to avoid added interest.
When a couple is ready, the process isn't overly complicated and you can apply online either separately or together. “Similar to a personal loan or a credit card, couples looking to take out a wedding loan would have to apply through a financial institution,” she explains. “Lenders use different criteria when considering applicants and most will provide a quote without running a credit check, so I suggest couples shop around for the best loan terms.”
Brambila also recommends that couples keep in mind that they may not be approved so wedding loans shouldn’t be considered “the glue that holds the wedding together” but instead, a bonus should it work out. It should be considered a supplement to the overall budget instead of your wedding depending on it.
“Ideally, a couple would want to take out the smallest loan possible and approval is based on credit score, income, the amount of the loan and other information requested on the loan application,” she says. “Borrowers with strong credit scores are most likely to be approved and receive the lowest interest rates.” If you decide to apply jointly, this increases your chances of getting approved at the most favorable rate. “This also allows for sharing the responsibility of the loan in a more official way,” Brambila says.
However, there’s also a third option in addition to applying separately or together: “If absolutely needed, a couple can ask a parent or more established family member or friend to co-sign for the loan to increase their chances of approval,” she says.
Pros and Cons of Wedding Loans
For couples who don’t have access to less expensive financing options, a wedding loan might be a viable solution. However, Brambila recommends going into it with the mindset of this type of loan being more of a last resort rather than a quick way to achieve over-the-top wedding day goals. “While wedding loans can be helpful in some cases, couples should try to avoid the need to take out a loan by setting a wedding budget and saving for the big day well in advance,” she says.
But if you think that this might be the right option for you, it’s important to understand both the benefits and drawbacks first.
Pros of Wedding Loans
- These loans typically have lower interest rates than credit cards.
- Wedding loans offer repayment terms that allow for long-term financing (typically between two and seven years).
- It’s fast access to cash.
- It’s flexible and the money can be spent however the couple decides.
Cons of Wedding Loans
- Depending on the financial situation, couples can be in debt for a year or more.
- Couples may be stuck with a high interest rate if they are not approved at a favorable rate.
- There can be other fees tied to the loan that borrowers may not expect or consider.
- You will be starting off your marriage in debt.
Wedding Loan Advice
The most important tip that Brambila can offer couples is to consider all of the other options first instead of limiting themselves to a wedding loan or jumping into this option too fast. “A financial advisor can help guide them through all of their options and make the right choice for their life together,” she says. But if you do take a loan, following these recommendations are key:
Don’t overlook the big picture.
“Just because you are getting married, doesn’t mean all of your other responsibilities are set aside,” explains Brambila. “Make sure that your wedding planning allows room to plan for your other longer-term savings goals, like saving for a house, retirement, or starting a family.”
Go into it prepared.
“Plan ahead to come up with a comprehensive timeline, overall budget, and repayment plan,” she says.
Meet with a financial advisor first.
Whether you set up an appointment virtually or in person, the decisions you make now can have a lasting impact, so speak with an expert first. “Just as a wedding coordinator can be key for navigating your big day, your financial advisor will be a crucial resource for helping you and your partner create a financial plan that accounts for not only your wedding day but also the years that follow,” she says.