Paying for a wedding is rarely a small feat. In the United States, the average cost of a wedding comes in near $22,500. As a result, many couples wondering if using a wedding loan to pay for their big day is a smart move. While a wedding loan could cover the costs, the drawbacks often outweigh the benefits. Here’s a look at why you should never use a wedding loan to pay for your ceremony and reception.
A Wedding Loan Isn’t a Special Form of Financing
By and large, the term “wedding loan” is just a way to rebrand a personal loan to make it more attractive to couples. Usually, it doesn’t offer anything beyond the personal loan experience. The application process is the same. There’s an income evaluation, credit report review, and credit score check.
Additionally, most wedding loans have repayment terms and interest rates that align with personal loans. Some also come with origination or other kinds of setup fees.
While the numbers may be more favorable than high-interest credit cards, they can still come with significant price tags when everything is factored into the equation. However, if a couple doesn’t have great credit, even the interest rates may not be better than a credit card.
Wedding Loans May Tempt You to Spend More Than You Should
Wedding loans can be a source of temptation. You may look at options for your big day that you didn’t think you needed previously simply because you could finance them. If that happens, you may rack up a much larger bill than you would otherwise.
Often, the main reason for this is that couples may focus on the size of the monthly payment over the total cost of the loan. For example, they might see a $50 change in the monthly payment as being nominal.
As a result, they may push for a much more expensive wedding. However, that $50 could represent thousands of dollars over the life of the loan, something that they might not realize until they are struggling to repay the debt over the course of several years.
Other Goals May be Harder to Reach
Whenever you make a long-term financial commitment – such as repaying a substantial loan – you dedicate a specific chunk of your income to that cause. Once you get a wedding loan, the payment money can’t be used for any other purpose, as you have to keep working to repay the debt.
As a result, even if the monthly payment is affordable at the moment, your financial options become more limited. You can’t direct that cash toward other goals that may matter to you, such as saving up to buy a home or start a family.
It’s important to look at what you have to give up or delay to repay any new debt. By doing that, you may realize that your other goals matter more, causing you to realize that the wedding loan isn’t actually a good move for you.
One Stress Gets Replaced for Another
It isn’t uncommon for wedding loans to be touted as a stress-reducing solution. After all, many couples struggle with figuring out how to pay for their wedding, and a loan takes that worry away.
However, you aren’t eliminating stress; you are simply shifting it from one place to another. Instead of anxiety about paying for your wedding, you’ll have to worry about repaying the loan, potentially for several years.
You Start Your Marriage Off with New Debt
One of the biggest reasons not to use a wedding loan to pay for your big day is that you start your marriage off with a new debt. That can put a significant financial hardship into play that can harm the relationship.
Disagreements about money are one of the most common points of contention in marriages. By adding a substantial debt into the mix so early, you could be setting yourself up for arguments down the line if the loan makes it harder to achieve other goals.
Ultimately, a wedding loan is a major financial commitment, one that you carry with you for months or years. It can hinder other parts of your life, harm your budget, and, in the worst-case scenario, damage your relationship.
As a result, most couples are far better off if they skip wedding loans or any kind of debt to pay for their big day. Instead, it’s best to either save up the money in cash or, if that isn’t an option, pare down the event to align with your budget. That way, you can make sure that wedding costs don’t do any long-term harm, ensuring you can start your marriage off on the right foot.
By the way, if you want to learn about Couples Financial Management (like paying off debt, saving for a downpayment on a house, investing in retirement, etc.), join this one-of-a-kind online training by Beyond Millions.
If you want to learn more about Couples Financial Management (like paying off debt, saving for a downpayment on a house, investing in retirement, etc.) without sacrificing your happiness, join this one-of-a-kind online training by Beyond Millions.
Do you think using a wedding loan to pay for your big day is a mistake or a good idea? Did you use a wedding loan to pay for your celebration only to regret it later? Share your thoughts in the comments below.
Read More:
- Never Pay for a Wedding Ring on Credit – Here’s Why!
- Can “Go Fund Me Pay” for Your Wedding
- This Is How Millennials Are Paying for Their Weddings
