Should you get a wedding loan to pay for your big day?

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Wedding loans provide a lump sum to pay for goods and services on your big day. (iStock)

The average wedding reception cost about $22,500 in 2021, according to data from The Knot. Depending on where you live, getting hitched can cost much more — couples in New Jersey averaged more than $53,000 on their nuptials last year. It’s no wonder that many couples borrow money to fund the wedding of their dreams, often in the form of credit cards or loans.

It’s best not to go into debt to pay for your wedding. But if you have to borrow to fund your big day, personal loans typically have lower interest rates than credit cards. Just make sure to shop around for the best lender and loan terms. Credible makes it easy to compare personal loan rates from multiple lenders.

Here’s what to know about wedding loans, as well as some tips for how to save money to avoid going into debt for your big day.

What is a wedding loan?

A wedding loan is really just a personal loan that you can use for any purpose, including wedding expenses.

Personal loans are typically unsecured, meaning that you don’t have to put up an asset — such as a house, car, or savings account — as collateral. The lender will consider your credit score to determine whether to approve your loan application, the maximum loan amount they’ll offer, and your interest rate.

Your wedding loan will also be an installment loan. This means you’ll receive the money in one lump sum, then repay the debt to your lender via monthly payments over a specific period of time.

Where to get a wedding loan

A variety of lenders offer wedding loans, including banks, credit unions, online lenders, and other financial institutions. It’s typically wise to shop around for your new loan through multiple different lenders. This can help you find the best available interest rate and save as much money as possible on the repayment.

Your credit won’t be affected when you check personal loan interest rates with Credible.

When comparing lenders for a wedding loan, look at a few key factors:

Loan limits — The minimum and maximum loan amount offered by the lender
Interest rates — How much the loan will cost to repay
Fees — Any applicable fees involved with the new loan, including origination or application fees
Funding time — How long it’ll take to receive the money once the loan is approved
Repayment terms — How long you’ll have to repay the loan, and how many months that debt can be spread out between

How to qualify for a wedding loan

Taking out a wedding loan requires you to both apply and qualify for the money. A few things you can do that’ll help you qualify for a new personal loan include:

Check your credit. By requesting a copy of your credit report, you’re able to not only look for potential errors (and then dispute them), but also see where your credit stands before you apply. If you need to work on improving your payment history or reducing your credit utilization, checking your credit score early on can ensure that you have enough time to make changes.
Lower your debt-to-income ratio, or DTI. Lenders typically look at your debt-to-income ratio, or DTI, to determine if you meet their income requirements. Your DTI compares your gross monthly income to the minimum payments required on any existing debt. If your current debt accounts for too much of your paycheck, you may have a tough time getting approved for a new loan. Paying down other debt can lower your DTI.
Get your paperwork in order. Lenders will likely request certain information and documents throughout the application process. These commonly include proof of identity, proof of employment, and proof of residence.
Compare rates from multiple lenders. Loan offers can vary widely depending on the lender. It’s a good idea to look at rates, terms, and fees from more than one lender.

Pros and cons of wedding loans

While there are some benefits to consider when taking out a personal loan to pay for a large expense, such as a wedding, there are also a few downsides to note before going this route.

Pros of wedding loans

It may have a lower interest rate than a credit card. If you must decide between paying for a wedding with credit cards or a wedding loan, the loan could come with lower interest rates.
Loan funding can be quick. Most personal loans take around five business days to fund, but you could get access to cash as soon as the same or next business day once approved, depending on the lender.
Couples can build credit. With an installment product such as a wedding loan, couples can build (or establish) a payment history and even boost their individual credit scores.

Cons of wedding loans

It’ll cost you. Personal loan lenders charge interest on the borrowed amount. Depending on your credit, this can cost you quite a bit. And if you miss a payment, you could be on the hook for late fees.
You’re starting your life together in debt. When it comes to marital stressors, finances are often at the top of the list. If you and your partner take out a wedding loan, you’ll be starting your life together in debt, which can cause additional stress.
Your budget will be affected. Unless you pay off your wedding loan ahead of schedule, the monthly payment could affect your budget for years. Wedding loan payments may take away from other shared goals you and your new spouse have, such as saving for the down payment on a new home or contributing to your retirement funds.

How to get the lowest interest rate on a wedding loan

No matter which lender you choose for your wedding loan, you can do a few things to ensure your interest rate is as low as possible.

Boost your credit score. Your credit history and score are some of the biggest factors when it comes to snagging a low interest rate. Make sure that your credit report is error-free, and that you’re making all your payments on time every month.
Shop around for the best lender. Don’t settle for the first wedding loan lender you come across. Instead, spend some time shopping around for the lender and loan options offering you the best interest rate and loan terms. Using a platform like Credible can make this easy, by allowing you to see offers from multiple lenders at once.
Snag an autopay discount. Many lenders offer a small discount each month when you sign up for autopay. This can save you tens or even hundreds of dollars on your repayment over time.
Consider a cosigner. Adding a cosigner with good or excellent credit to your wedding loan can be one way to unlock a lower interest rate — especially if you don’t have an extensive credit history or have a low score.
Repay your loan faster. In general, a shorter personal loan term length will mean a lower interest rate. This also means a higher monthly payment, so be sure to balance the savings with your ability to repay.

When a wedding loan makes sense

Couples should try to avoid going into marriage with new debt, if possible — especially if the bulk of that debt is incurred on a single wedding day. But taking out a wedding loan might make sense in some situations:

If you need to borrow money for your big day, a wedding loan will generally be more affordable than a high-interest credit card, and you’ll typically have a fixed monthly payment.
Perhaps you know you’ll have more cash in the near future that will allow you to repay the loan faster — if you’re starting a new job or finally paying off the last of those student loans. In this case, taking out a personal loan that doesn’t charge prepayment penalties may be an acceptable solution, allowing you to pay off the debt as soon as possible.
If you’re trying to build or improve your credit, taking out a wedding loan and repaying it on time (or ahead of schedule) may help boost your credit score. Improving your credit may help you qualify for better loan rates and terms in the future.

Taking out a wedding loan makes the most sense when you have a stable income and enough flexibility in your budget to take on the monthly payment and repay the debt in the shortest amount of time possible.

You can use Credible to easily compare personal loan rates from various lenders.

Using a wedding loan vs. a credit card

One alternative to taking out a wedding loan is to use a credit card for those happily-ever-after expenses. But is that the right move? Here’s a comparison of personal loans vs. credit cards.

Finance charges

Personal loans — You’ll pay interest on the loan from day one, but rates are typically lower than credit cards (averaging about 9%). And the amount of interest you’ll pay will be fixed from the time you take out the loan until it’s fully repaid.
Credit cards — You may be able to find a balance transfer card with a 0% APR offer on purchases, allowing you to pay off big-ticket items over time without interest. But you generally need good to excellent credit to qualify. And if you can’t pay off the full amount before the introductory period ends, you’ll be stuck with the card’s usual APR — which averages around 16.4% or more. What’s more, the longer you take to pay off the full balance, the more interest you’ll pay.

Access to funds

Personal loans — You’ll receive a lump sum upfront which you can use for anything you’d like. This is especially helpful with vendors who charge credit card processing fees.
Credit cards — You’ll charge as needed up to your credit limit. If you spend less than you expect, great. Need to spend more? Pay down your balance or request a credit limit increase.

Fees

Personal loans — Lenders may charge origination fees, application fees, or prepayment fees, though these aren’t very common. They may also charge a fee if you make a payment late.
Credit cards — Credit card fees can include annual fees, late fees, cash advance fees, and foreign transaction fees, among others. Some vendors may also charge additional fees for processing a credit card payment.

Rewards

Personal loans — You won’t earn any cash back, miles, or points for personal loan spending.
Credit cards — With the right rewards credit card, your wedding spending could net you plenty of cash back in the form of statement credits, miles, or points.

Repayment

Personal loans — Your personal loan will involve a set monthly payment for the life of the repayment term. This typically can’t be adjusted (short of refinancing).
Credit cards — Your monthly minimum payment can fluctuate based on the statement balance.

Protection

Personal loans — You’ll typically use personal loan funds like cash to pay for wedding expenses. If a vendor falls through or breaks their contract, this affords you no protections.
Credit cards — Using a credit card to pay for goods and services means that you may be able to recoup expenses if a vendor falls through or an item doesn’t arrive as expected.

In the end, the best choice for you depends on how you plan to spend, what your vendors require, how much protection you think your purchases will need, and where you’ll save the most money in fees and interest.

Ways to cut down on wedding costs

If you’re worried about how you’ll pay for big wedding expenses, there’s one thing to consider before you take out a loan or line of credit: Trim down your budget.

While this isn’t the most exciting approach, it can be a great way to enjoy your big day without starting your marriage off in debt.

Consider these ideas for hosting a cheaper wedding (especially after Covid):

Opt for a buffet instead of a seated dinner. Catering companies typically charge much less for a buffet-served meal compared to a plated dinner. You can easily save hundreds of dollars by going this route.
Find an affordable venue. You might be amazed at how well the right flowers and decor can transform an otherwise-underwhelming space into your dream wedding. Consider renting out lower-cost venues, such as a church reception hall or even an outdoor park.
Put your guests behind the camera. There’s no replacement for a talented photographer, especially for ceremony photos. But for the reception, you could let your photographer leave early and offer baskets of disposable cameras to your guests. You’ll get some candid shots you might not have seen otherwise and save hundreds on those extra hours.
Elope. Do you dream of an over-the-water hut in Bora Bora but can’t swing a pricey honeymoon after your big wedding? Combine the two and just elope. You can have the honeymoon and private ceremony of your dreams, and still host a smaller (less formal) celebration with loved ones when you return.

There’s no doubt about it, weddings can be expensive. But by planning ahead, cutting costs where you can, and using the right loan or card to pay for the rest, you can make sure that your big day doesn’t land you in big debt.