There is no hiding the fact that weddings can be very pricey affairs. The cost of a wedding ceremony and reception, on average the cost is approximately $19,000 to $28,000.
Paying for a wedding can be a challenging endeavor, despite the fact that these figures are probably on the high end of the spectrum. This is because a few expensive outliers can easily skew an average, and survey respondents were enthusiastic enough about their weddings to join a website and answer questions.
Some engaged couples decide to take out wedding loans so that they may afford to throw a spectacular celebration. Even while there are a number of ways to borrow money to pay for a wedding, including personal loans that are promoted specifically as wedding loans, taking on debt may not be the way that you anticipate beginning your life together as a married couple.
Let’s go through the basics of wedding loans in Singapore and the pros and cons to make the decision about whether or not to take out a loan to pay for your big day.
What is Wedding Loan?
A wedding loan is a loan that is taken out solely for the purpose of paying for the fees associated with getting married. It is a marketing term the vast majority of the time.
Personal loans are what are known as wedding loans, and just like any other type of personal loan, qualification for a wedding loan will be based on your creditworthiness.
It’s possible to use any type of personal loan in Singapore to cover the costs of getting married, despite the fact that some lenders market their products with phrases like “wedding loans,” “engagement loans,” and “bridal loans.”
There are several different lenders from which you can choose to borrow money in order to cover the costs of your wedding.
As soon as you start looking for these items, you will come across a number of different online wedding lenders offering their services.
Personal loans are available from financial institutions such as banks and credit unions, and can be used to help pay for wedding-related expenses.
Pros of having a personal loan for your wedding
Enables you to plan the wedding of your dreams without regard to financial restrictions
You don’t have to make any sacrifices depending on the amount of money you have accessible since you can have everything you desire, regardless of how good or bad it is.
Possibly have interest rates that are more favorable than those of credit card debt
You have a better chance of qualifying for a loan with a fixed interest rate that is lower than the majority of rates that are available on credit cards if you have strong credit.
Flexibility
You can use the money from a wedding loan to pay for almost anything having to do with your special occasion, including the location, the cuisine, the engagement ring, and other things.
It enables you to avoid borrowing money from members of your own family.
A lender is able to supply you with the finances you require without attaching any emotional stipulations to the transaction. If you would rather not borrow money from family members or if doing so is not possible for you, this may be an attractive alternative.
Let’s you keep your savings for other expenses
A wedding can easily deplete your savings toward a down payment or another financial target. Taking out a wedding loan could help you keep saving toward other goals.
Cons of having a personal loan for your wedding
Requires a monthly payment
Adding another monthly cost to your budget could be a burden, especially once the honeymoon is over and you realize how long you’ll be paying for your celebration.
Comes with interest charges, which may be higher for borrowers with low credit scores
Using a wedding loan means everything will cost more than the numbers on the invoices.
You’ll also pay interest on those costs, possibly for several years. If your credit score is on the lower side, the bank interest rate could be up to 24.99%.
May encourage overspending
Money Lenders in Singapore may offer you a loan of more than you’d actually planned to spend on your wedding, which might influence you to increase your wedding budget.
Doesn’t offer payment protection
When you get a loan, you’re responsible for paying off the debt regardless of what happens on your wedding day. Credit cards, on the other hand, might offer valuable buyer protection.
For example, if a photographer or caterer doesn’t show up, you may be able to dispute that bill with a credit card issuer.
May not be the most affordable option
If you have excellent credit, you might be able to take advantage of a 0% credit card promotion. Borrowing money this way—and paying off the balance within the promotional period—could eliminate your interest costs.
What To Look for when looking for personal loan for a Wedding Loan
If you do decide to take out a loan, you should make sure that the terms of the loan include provisions that reduce the burden of the debt to the greatest extent possible.
Unsecured Loan
Your wedding loan needs to be one that doesn’t require you to put up anything as security. If you can’t keep up with payments on a loan you took out against your house, for example, your lender has the right to take your house.
Low, Fixed Rate
Your interest rate should be as low as possible because you will be required to pay interest on the remaining balance of the loan until it is paid off. This will drive up the overall cost of your wedding.
When you have a fixed rate, it is much simpler to create a spending plan that accounts for your monthly payments. If you do not have a fixed rate and the interest rate increases while you have the loan, your monthly payment will increase.
Loan Term
Keeping your loan term (the amount of time you have to pay off the debt) as low as possible might help you save money on interest charges.
When you carry a balance from month to month or year to year, you accrue interest charges. The monthly payments will be higher if the period of the loan is shorter, but you will pay off the debt faster.
Monthly Payments
Even while it may be tempting to focus on the overall amount of the loan, it is more important to ensure that the monthly payment is manageable within your budget.
By extending the length of the loan, it is possible to obtain a lower monthly payment; but, doing so would result in greater overall interest expenses.
Total Interest Costs
Determine the total amount of interest that will be accrued over the course of the loan’s term. It’s possible that you won’t even be aware of the interest charges, but they’ll keep piling up until the entire sum is paid off.
You can better evaluate your available financing choices with the assistance of a loan calculator or an amortization table.
