Jan 29, 2020
By Mariclare Cranston, Content Specialist

Using a Personal Loan for Your Wedding

Say yes to the dress – without piling on higher rate credit card debt. From photographers to florists, the expenses of planning your big day can add up fast. In fact, The Knot puts the average cost of a wedding in 2018 at almost $34,000! That amount may seem staggering, but keep in mind there are ways to cut costs.

Can I use a personal loan to pay for my wedding?

With flexible terms, lower rates and the ability to borrow up to $25,000, a Personal Loan can help make your dream wedding a reality, without racking up credit card debt. Compare your credit card interest rate to our Personal Loan rate, and you can see you may save yourself hundreds of dollars.

How do I start planning for my wedding?

When planning for a wedding, most couples realize they need to pick a date, find a venue, select their wedding party and of course look for a dress. But building your wedding budget is just as critical. Before tackling a wedding budget, take a look at how you currently save and spend money. Use a budget tool to capture all of your income and all of your expenses. Are there areas where you are currently spending money that you can cut back on? For example, if you typically buy lunch packing your own could save you some money. In turn, you can pump that money into a special savings account you’ve established for wedding expenses. The idea is to try to save up as much of your own money as you can to pay for your celebration to reduce the amount that you’ll have to finance.

Download our free budget tool now! 

Use our free budget tool to give yourself the financial picture you’ll need to start planning the financial end of your wedding.

download our budget sheet

Is a personal loan a better option to pay for my wedding than a credit card?

Personal loans may be more attractive for filling any funding gaps when planning your dream wedding. Putting a large charge on your credit card will add up over time thanks to higher interest rates. The example* below shows that using a credit card means you could end up paying almost double the amount of interest.

  Personal Loan Credit Card
Amount $6,000 $6,000
Interest Rate 8% 18%
Term 48 months 48 months
Monthly Payment $146 $176
Total Interest Paid $1,031 $2,460

*All calculations based on bankrate.com payoff calculator

Furthermore, many credit cards carry a variable interest rate. Personal Loans, on the other hand, have fixed interest rates. This ensures that your monthly payment will be the same each month, provided you don’t accrue any late fees. Knowing exactly how much your monthly payment will be allows you to adjust your budget and determine the affordability of your personal loan. Personal loans also carry flexible terms, allowing you to select a term that best works with your financial picture. The available terms will depend on your financial institution. At MHV, personal loans carry terms up to 60 months, giving you the freedom to find a payment that will work with your budget.

What can I use my wedding loan for?

With a wedding personal loan, you can use the funds for just about anything you need. Use the funds from a personal loan to pay for:

  • Photographer

  • Videographer

  • Flowers

  • Dress

  • Wedding Planner

  • Even your honeymoon!

Do I qualify for a wedding loan?

Lenders will often look, at the very least, at your credit score and your debt-to-income ratio (DTI) before deciding to lend to you. Your credit score is a mathematical analysis of how likely you are to repay your loan on time. Your score factors in things like how many loans or credit cards you have, how well you pay your bills on time, how much of your available credit you’ve used and how old your oldest credit or loan account is. All of these factors are weighted and combined to assign you a score. It is very important to have a good understanding of what your credit score is before you begin the process of applying for a personal loan. If your score isn’t high enough, there are steps you can take to work on improving it.

DTI measures how much debt you currently have relative to your income. A DTI that is too high suggests you may be spread too financially thin to be able to make the payments on your personal loan. Even if you have a good credit score, a high DTI can cause some lenders to deny your application. Using a monthly budget tool is a great way to manage your finances and keep your debt at a manageable level.

For more information on understanding your credit, watch our brief explainer video here. 

Don’t let the stress of paying for your big day take a toll on your excitement. Work your budget to see how much you can save, and explore lower cost financing options, like Personal Loans, to fill the gaps.

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