Let’s be real — weddings are expensive. Between the venue, entertainment, and rings, the average Australian wedding costs $36,000. According to a survey by Money Smart, Australia, more than 82% of couples dipped into their savings to pay for their wedding.
When you want everything to be more than perfect on your big day, expenses quickly add up. Borrowing money seems like the only option, but is it a good idea? And are there any cons?
Let’s take a closer look at the pros and cons of taking out a wedding loan so you can make an informed decision:
Pros of Wedding Loans
Wedding loans are a type of personal loan designed to cover the expenses of your wedding. Here are some benefits of taking one out:
Enhanced financial flexibility
So you’re dreaming of a big day that isn’t possible with your current savings. A wedding loan can provide financial stability. You will get upfront money, which can be used for any or all expenses. Some people cover the cost of their dream venue, while others use the loan to book their honeymoon.
The process itself is pretty straightforward. After submitting the application, you will get funds within days, sometimes even 24 hours.
Protecting savings
As hinted earlier, a huge number of people dip into their savings accounts to cover their wedding expenses. Financial experts believe that savings accounts should be kept intact for other big, more time-sensitive financial goals. With a wedding loan, you can afford your dream wedding without draining your savings account.
Lower interest rates
Unlike credit card bills, wedding loans come with a much lower interest rate. They are a type of personal loan, so you will pay very little interest.
Possibility to improve credit score
A wedding loan can be an excellent way to improve your credit score. The key is abiding by the repayment terms and making payments on time. This will make future borrowing super easy and affordable.
Reduced stress
Wedding expenses incur stress. Taking out a loan from a reputable lender will allow you to relax and enjoy your big day.
Cons of Wedding Loans
Unfortunately, there are some drawbacks to taking out a wedding loan. Here’s a brief breakdown:
Debt burden
Taking out a wedding loan means adding one more monthly payment to the mix. Consider your future financial goals and determine if paying back a wedding loan is actually doable.
Facilitates overspending
Many couples feel the societal pressure to spend. Once they take out a wedding loan, overspending becomes easy.
Can strain a marriage
Starting out a marriage in debt can have numerous negative consequences. The constant burden of paying back a loan with interest might strain your relationship.
The Bottom Line: Responsible Borrowing
Taking out a wedding loan isn’t inherently wrong or bad. But it’s important to approach things responsibly. Our advice? Only borrow what you can afford to repay. Consider your financial situation and determine how much you can comfortably repay in a specific time frame.
Lastly, discuss the repayment terms with your partner. Ensure open communication and mutual decision-making.
