A dream wedding needs a lot of planning- from buying that beautiful wedding lehenga to choosing the right caterers, everything needs to be perfect. But most of all, what it takes to plan a perfect wedding is a good financial planning. Now, what happens when you don’t have enough funds at hand to cover your wedding expenses? Should you dig into your deposits and savings? We advise not to do that. Instead, you can turn to your bank for a personal loan.
A personal loan comes in handy to cover the costs of your dream wedding. It is an unsecured loan that offers benefits of quick disbursal and easy documentation. Before we dig deeper into how you can avail a personal loan to meet your wedding expenses, let us learn why it is a good choice.
It is better to take a personal loan and pay off in easy EMIs than deplete your savings to cover the wedding cost. Here are a few reasons why this is a good bet:
Quick Disbursal - If you have made a financial plan for your wedding in advance, it will be extremely difficult to find a way at the last minute. The proceeds of a personal loan can be quickly disbursed to the borrower if he/she has a good credit score and is able to present all necessary documents on time. Unlike other types of loans that might take a while to process, personal loan is quick and hence best to fund your dream wedding.
No Risk to Assets - Another reason why marriage expenses can be met with personal loans is that it is an unsecured loan. You do not have to offer any of your assets as collateral so there is no risk of losing any asset.
Flexibility - When you take a personal loan you can enjoy complete freedom to use the loan proceeds. For example, if you have already used some of your savings for the wedding arrangement any extra amount can be used to make up for it. If you wrongly estimated the wedding expenses and took a loan for a bigger amount (though it is not advised) you can use the same for setting up your new home or to fund your honeymoon expenses.
While personal loan may be a good idea to cover the expenses of your dream wedding, there are a few things you should consider before signing on the dotted line-
Discuss It with Your Partner - Ask yourself one question- “Do I want to start my married life with a debt burden?” And ask the same question to your partner. Take the step only if both of you are ready to take up a debt. A loan might do more harm than good when taken without the consent of your partner. So in order to avoid any tension during the initial stages of your marriage, it is best to discuss and decide.
Loans Last Longer than Celebrations - Although it may seem like a good idea to fund your marriage with a loan, one should not forget that loans have to be paid back along with interest. Personal loan, which is usually a high cost loan, will put significant interest burden on you along with principal repayment. Longer the tenure, higher will be the total interest cost. So it is better to choose wisely.
Know Your Repayment Capability - This rule goes for all types of loans, not just for personal loans. You must know whether you can pay off your loan within the stipulated time period. Do not get over-enthusiastic and take loan for a bigger amount that you will struggle to repay. In case of a wedding loan, you should know what part of your income this loan will take as EMIs. When two healthy incomes are combined towards making an EMI payment, it will not be a big trouble. However, if both of you are in the initial stages of your career and only make an average income, an added loan EMI may take a toll on you.
Don’t Borrow More Than What You Need - You should never borrow an amount that exceeds your requirements, especially in case of personal loans that come with comparatively higher interest rates. An extra amount will come with an extra interest cost so take wise steps.
To plan your dream wedding, you must first ask yourself whether you really need a personal loan. Note down every single thing that you are going to need and how much it will cost. Estimate the total expense of your dream wedding and then compare it with the money you have at hand. If there is little difference between the two, think of some other ways in which you can meet the expenses.
In case you choose to take a personal loan, it is good to keep the following points in mind:
• Take loan only for the deficit in the estimated expense
• Negotiate for a lower rate of interest
• Shop around for the best deal
• Discuss the terms of pre-payment and part-payment in advance
• Know the lock-in period
• Do not fall in the trap of any ‘add-on’ features
If you are too apprehensive about personal loans, you can resort to some other ways of covering your dream wedding expenses. Listed below are a few such alternatives-
Credit Cards - A number of people pay for different wedding related expenses through their credit cards. Credit Cards come with reward benefits and cashbacks which can help you earn while you spend. However, you have to be aware of how to use your card for maximum benefits. For example, if your credit card offers airline privileges, you should use it to book your honeymoon flight tickets.
Top-up Home Loan - For people who have a home loan in their name can take a top-up home loan. A top-up loan works as a great substitute for personal loan as it is available at comparatively lower rates. The paperwork will also be significantly less as the bank will already have your details in their database. And most of all, this loan also offers flexibility of usage much like a personal loan.
Instead of using a line of credit to pay for your wedding expenses, it is better to save for it as soon as you decide to tie the knot. The millennial generation is increasingly becoming aware of household finance and personal finance. There are many couples who extend the time between their engagement and wedding to save as much as they can. Planning in advance and saving towards your wedding expenses is the best way to pay for your dream wedding. However, if you are ready to take a loan, personal loan is quite a good choice.