Guide to wedding loans

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With the average cost of a wedding in the UK exceeding £30,000, funding your wedding is no easy feat.

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Bills are up, according to the National Wedding Survey 2019, conducted by Hitched, which found that the average cost of a wedding rose to £31,974 in 2019, up from £20,799 in 2014.

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So, unless it’s cash, you need to consider how to go about borrowing for your big day.

consider a loan

One option to consider is a personal loan. This will enable you to borrow a certain amount over a certain period of time – and at a fixed interest rate. This comes with the benefit of knowing in advance how much you’ll be paying each month – and for how long – both of which can prove to be a blessing as you set out early in married life.

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Equally, since personal loans are unsecured, your home is not at risk (as it would be with a secured loan). And with some lenders, if you apply online and are considered ‘eligible’, you can potentially get the money in your account the same or next day.

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What Exactly Is a ‘Wedding’ Loan?

Marriage loan is an unsecured personal loan, but with a specific purpose. As part of the online application process, you will be asked why you want cash. All you need to do is state that you want to borrow money to help finance the wedding. (Other reasons for taking out a loan may include ‘home improvement’ or ‘debt consolidation’.)

Some lenders may take the ‘objective’ into consideration when deciding whether or not to grant you a loan. That said, saying you want to use it to pay for the wedding shouldn’t count against you.

And, once you’ve been accepted, the loan will work the same way, no matter what you use it for.

How much can I borrow and for how long?

Typically, with a wedding loan, you will usually be able to borrow between £10,000 and £15,000. Some lenders allow you to go up to £25,000.

Generally, you can choose to repay the personal loan with tenures ranging from 12 months to five years. That said, with a loan of £25,000, you may be offered an even longer repayment period. But longer term means lower monthly payments each month, you may end up paying more interest overall.

When taking out a marriage loan, the best approach is to figure out how much you can realistically afford to pay each month, and then borrow as little as possible over the shortest period.

Interest Rates on Personal Loans

As a borrower, you may be able to get a personal loan with a very competitive Annual Percentage Rate (APR).

The main thing is to do your research and compare rates carefully. When comparing deals, keep in mind that smaller loans come with higher APRs than larger loans. However, don’t let this become a reason to borrow more than you need.

You may not get the advertised rate

With a marriage loan, it is important to note that the rate you actually get will vary depending on the amount you borrow and your individual circumstances. This includes your credit rating.

While lenders may advertise lower interest rates, legally, these are required to be offered to only 51% of successful applicants. The rest will then be offered higher rates.

To get the lowest loan rate, you’ll need a clear-cut credit record.

If your credit rating is slightly poor, there are some easy steps you can take to improve it. These include getting registered on the voter list, making sure you pay all your bills on time, and taking action to correct any incorrect (or outdated) information.

Compare Personal Loans from Top Lenders

Check your eligibility for multiple types of loans, without affecting your credit score.

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Check for Early Repayment Fees

Be sure to check what the penalty will be for paying off your marriage loan in full before the term expires. This can often amount to between one and two months of interest.

go in with open eyes

While wedding loans can be a great way to borrow, taking out a loan is a huge commitment. This is especially the case if you decide to borrow a large amount.

Opting for a marriage loan is not a decision that should be taken lightly. It’s important to make sure you can meet all monthly payments.

And you need to remember that any debt you take on will eventually have to be repaid.

Be sure to do a soft search

When applying for a marriage loan, avoid applying too many one after the other, as multiple ‘discoveries’ can leave a ‘footprint’ on your credit file and hurt your score.

The best approach is to use an ‘Eligibility Checker’ tool that enables you to do a ‘Soft Search’ to find out your chances of being accepted.

Although this type of search is still recorded in your credit records, lenders cannot see it, so it will not affect any future applications you make for credit.

what are the options?

  • save up – To avoid getting into debt for your marriage, you might want to consider saving instead. The big advantage of using savings is that you will not be charged interest
  • Turn to the shore of mom and dad – If you are extremely lucky, you may be able to turn to your parents or another family member for financial assistance, even if it is in the form of an interest-free loan.
  • Put it on the plastic- If you want to borrow a more modest amount, you can pay for your wedding with a 0% purchase credit card. This would mean that you can spend for a period of 18 months or more without paying interest. However, note that the borrowing limits from a credit card are much lower than that of a personal loan. And, you need to make sure that you will be able to clear your dues before the introductory period is over. Otherwise interest rates could skyrocket.

Pay deposit on credit card

At least, when it comes to money for your wedding, it’s worth putting a deposit on your credit card. In this way, you will get protection under Section 75 of the Consumer Credit Act.

The protection under section 75 applies when you pay for goods or services costing more than £100 and up to £30,000, and you get it even if you simply put the deposit on your plastic.

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