Planning a wedding? Prepare for sticker shock: On average, a U.S. couple spends $35,000 on the big day, according to a 2023 study from The Knot.
That figure doesn’t include the engagement ring or the honeymoon.
If you don’t have tens of thousands of dollars ready to throw at a wedding, you might consider a wedding loan. But engaged couples need to make sure a loan doesn’t cause a financial hangover that lingers years after the big party.
Here’s what you need to know about wedding loans as an alternative to credit cards and other financing options.
[Related:Best Wedding Loans.]
Are Wedding Loans a Good Idea?
A wedding loan could help you avoid credit card debt and relieve stress if you can’t afford some or all of your wedding expenses. Still, wedding loans are debt and could strain your marriage.
“For most people, taking out a loan of that magnitude or anywhere near that magnitude as sort of a kickoff to your married life is kind of risky,” says Mike Schenk, deputy chief advocacy officer for policy analysis and chief economist for the Credit Union National Association.
He encourages engaged couples considering a wedding loan to answer these questions before signing on the dotted line:
— How much will you finance?
— Who will pay for the loan?
— How will the payments compare with your income?
— How long do you plan to take to pay off the loan?
Also, take these pros and cons of wedding loans into account:
Pros
You could avoid credit card debt. A 2024 U.S. News survey found that 39% of newlyweds incurred credit card debt from their wedding.
If you can’t pay for your wedding upfront, a loan might be a good way to spread out payments with a lower interest rate than a credit card. The debt also has a set end time, unlike the revolving debt of a credit card.
“The problem with the credit card scenario is that there’s no term limit on it,” says Jeffrey Edwards, certified financial planner and senior vice president at Lenox Advisors, a wealth management and insurance advisory firm.
Credit card debt can drag on forever compared with the term limit for a personal loan.
Make sure to look at the loan’s APR, Edwards advises. If you have poor credit, interest rates on personal loans could be similar to or higher than what you’d pay on credit cards.
You could avoid borrowing money from family members. Couples pay for about 49% of their wedding costs, with family and friends picking up the rest, according to a 2022 study from The Knot. You might be uncomfortable asking family members and friends for a loan on top of that, which could be a good reason to pursue funding through a lender.
You could relieve stress. Do you have a strong credit score that can help you qualify for a good interest rate on a loan? You may be relieved to cover your wedding costs quickly and efficiently with a loan, as long as you won’t struggle to make the payments.
[Read: Best Bad Credit Loans.]
Cons
You could take on too much debt. A loan might seem like an ideal way to cover wedding costs and put them off for another day. But a loan might overwhelm your budget.
“Couples should look at the shared budget and make sure that adding another payment won’t tip the scales and cause undue financial stress,” says Jeffrey Arevalo, financial wellness expert at GreenPath Financial Wellness, a national nonprofit credit counseling agency based in Farmington Hills, Michigan.
You could have to delay life plans. Couples might be looking to buy a house, start a family and travel after getting married. All of those plans could be delayed by taking on too much wedding debt, whether it’s with a wedding loan or credit cards.
Wedding loans “could severely impact their cash flow, particularly as it relates to student loan debt and mortgage payments,” Edwards says. A three-year loan at a rate between 6% and 36% “can have a significant impact on short-term cash flow, especially if you’re looking to purchase a house.”
Your loan debt could cause stress. Early married life is often filled with adjustments, both personal and financial. Adding an untenable debt load can be a recipe for disaster.
“It really has the high likelihood of producing a lot of stress into a new relationship,” Schenk says. “My hunch is that most people are better off to avoid that stress.”
[Read: Best Personal Loans.]
Can You Get a Personal Loan for Your Wedding?
A wedding loan is a personal loan you can use to cover wedding costs. Personal loans generally range from $1,000 to $100,000. According to the U.S. News survey, 18% of newlyweds used some kind of bank loan to pay for a wedding.
Weddings are “another marketing approach to a personal loan,” says Edwards. The loan “really is treated and handled in the same way.”
A wedding loan is unsecured, which means that the interest rate will be higher than a loan secured by property, such as a mortgage. The terms are usually two to five years.
Can You Have a Wedding Without Debt?
If you need a personal loan because of cash flow issues with wedding expenses, that could point to a larger spending problem, Edwards says.
Couples who successfully manage wedding costs, he says, “identify exactly what they want to do and keep expenses low. They end up doing a very good job of it. But that’s because they tend to be much more cost-conscious and financially savvy.”
If you need to take control of your wedding budget, a wedding loan might not be the answer.
“Cutting back on expenses is the smartest financial decision in most cases,” Arevalo says. “Reducing the size of the guest list or choosing an offseason or afternoon wedding could be ways to reduce costs while still keeping the most important aspects of your celebration intact.”
The goal should be to take on as little debt as possible from your wedding to set yourselves up for long-term financial success.
“There are so much better uses for a young couples’ money than a wedding loan,” Edwards says.
[Calculate: Use Our Free Mortgage Calculator to Estimate Your Monthly Payments.]
More from U.S. News
How to Get a Small Personal Loan
Survey: 56% of Newlyweds Went Into Debt to Pay for Their Wedding
What Is a Good APR on a Personal Loan?
Are Wedding Loans a Good Idea? originally appeared on usnews.com
