Wedding Loans
Weddings are expensive, there’s no doubt about that! Many people go into debt to pay for them, and loans for weddings are usually unsecured personal loans, although they can be obtained as secured loans, too. The information below will help you better understand the differences between these options and things to think about when deciding on what’s best for your individual situation.
Things To Think About First
- If you’re thinking about obtaining a loan to pay for your wedding, you and your future mate need to talk openly and honestly about the amount of debt you’re willing to take on.
- What other debts will you be carrying as a young couple?
- Do you plan to buy a home?
- If so, carrying debt from the wedding may impact your ability to obtain a home loan.
- If you both agree that a wedding loan is appropriate, then it’s important to establish a wedding budget that works within the amount of money that you have decided to borrow.
- It’s very easy to go over budget with extras and special touches, so make sure your budget is realistic and complete.
- Most importantly, you need to be in agreement that the debt you’ll be incurring will be manageable for you as a newly married couple.
Unsecured Loans For Weddings
Most loans for wedding expenses are considered unsecured. This means that you are borrowing money without putting anything up for collateral or security against the loan. This type of loan is often more difficult, but not impossible, to obtain. They often come with some restrictions on how you can spend the money you borrow.
Who Offers Unsecured Loans?
Unsecured loans are offered by many different lenders. Banks, building societies, and other lending companies are typical sources for this type of loan. You can also work through an independent loan broker who has access to many different lenders and many different unsecured loan programs.
What Are The Advantages Of An Unsecured Wedding Loan?
The biggest advantage of an unsecured loan is that you do not put something of significant value, like your home, at risk. Many people just starting out don’t have a home or property to uses as collateral, so for them an unsecured wedding loan is really the only option. Other people who do own a home are usually already carrying a mortgage or other secured debt using their home as collateral, so they are reluctant to add more.
Another advantage of an unsecured wedding loan is that the loan process usually can be completed more quickly than a secured loan. This is because you don’t have to go through the extra step of having the lender determine the value of your collateral. Eliminating this step can speed up the entire transaction.
What Are The Disadvantages Of An Unsecured Wedding Loan?
Unsecured wedding loans do have disadvantages. They usually carry higher interest rates, the amount available for borrowing is typically less, and they often come with restrictions on how you can spend the money you receive. Also, the rates and terms of an unsecured loan usually vary depending on your personal circumstances, so a lender’s advertised rate may not be the one they ultimately offer you.
Why Do Lenders Have So Many Different Rates?
As mentioned previously, lenders consider your personal circumstances as a major factor when determining the rate for your unsecured loan. They also take into account the amount you want to borrow, the length of the repayment term, and what you want to do with the money you receive. Some lenders even take into account your method of application. For example, if you conduct the application and loan process online they may lower the interest rate of your unsecured car loan. Because of these variables, it’s important to do plenty of research to find the best deal for you.
What About The Details And Fine Print?
Always, always read and understand the details and fine print of whatever unsecured car loan you choose. For example, does the lender offer or require loan protection insurance? Are there any charges or fees if you repay the loan before the end of the loan term? Does the lender offer any repayment holidays (the option to skip a payment after a designated period) and if so, is there an associated fee? Can you select a specific due date for your monthly payment? Does the lender require you to make the monthly payment using a specific method such as direct debit from your bank account? These are just a few of the things that lenders may include in their unsecured wedding loan agreements.
If you are in the market for a wedding loan, consider carefully whether an unsecured or secured loan is best for you. Research as many options as possible and look for lenders who will tailor a loan that fits your personal circumstances. Keep in mind that an unsecured wedding loan usually carries a higher rate of interest, but the loan process can often be completed more quickly than a secured loan. No matter what your personal circumstances, take the time to learn all you can and you will end up with the loan that meets your needs.
- - The average cost of a wedding is around £17,000, and one major bank estimated that in 2005, approximately £467 million worth of personal loans would be taken out solely to fund the expected 260,000 weddings. And the amount of money people spend on weddings is steadily rising at a rate of ten percent per year.
