The Ultimate Guide to a Wedding Loan [Plus the 5 Best Options for 2021]
Getting a wedding loan is becoming more and more popular for soon-to-be-wed couples. Whether you’re going with a traditional theme or leaning more towards a Star Wars or even a Disney-themed ceremony, looking into wedding loans can give you intelligent financing options that won’t leave you with any regrets. And if you’re interested in securing this type of loan, here’s what you need to know.
What Is A Wedding Loan?
Getting a wedding loan can be a smart way of paying for your special day. While the average cost of weddings here in the U.S. have been decreasing in recent years, the latest data pegs the current average at around $30,000. And if you’re planning to do your wedding during the peak months of May to October, you can expect to pay more than the average price.
A wedding loan is simply a personal loan that’s meant for financing a wedding. You can use the funding from this type of loan to pay for basic needs like the venue, the band, the attire, the flowers, and all other decor. This also includes stuff like getting a photo booth, welcome gifts for guests, videography costs, and even wedding insurance. The amount of money you can borrow depends on your creditworthiness and whether or not you have a co-borrower who legally shares the obligation to repay the loan in full. This is particularly helpful for convincing borrowers, as a personal loan for a wedding is typically unsecured.
You can borrow anywhere between $1,000 to more than $100,000, depending on the lender. Whether you need a bit of extra cash to pay for your fancy digital invites, or a couple thousand to secure that dream beachfront venue, getting a loan will help. If it’s part of your wedding, you can even use the loan to pay for Scuba diving costs!
Everything You Need To Know About Getting A Wedding Loan
When it comes to any type of personal loans, the goal is to always find the lowest possible rate. The best strategy for comparing rates is to check the average percentage rate (APR).
Average Percentage Rate
This is the total yearly cost you need to pay for borrowing money. The APR is one of the most crucial factors to consider before signing anything. This percentage number basically tells you how much you need to pay on an annual basis, and can be useful for comparing loan options with very similar factors.
The better your credit score and current income, the more money you can borrow – the lower your APR. If you have a low credit score and need to settle for a higher APR, make sure that you can afford the payments. Nowadays, prominent lenders like Upstart, Best Egg, and Upgrade provide loan options for those with fair or bad credit scores. Never missing a payment and repaying your loan in full can increase your credit score later down the line.
Monthly Payment Cost
This is the amount that you need to pay on a monthly basis in order to pay off your loan. Agreeing to a higher monthly payment cost can significantly lower your APR. Also, it’s always best to find fixed payment options so you always know what to expect.
The term is the amount of time you have to repay the loan in full. This can be anywhere from a couple weeks to several years. If you can afford to pay more on a monthly basis, you can shorten the term, which in turn can lower your APR. Marcus’ personal loan calculator can provide more insight on how shorter terms, higher monthly payments, and better credit scores can affect the APR of a loan. Most lenders are open to adjusting these factors to accommodate lenders, so don’t be afraid to adjust terms or payments to fit your budget and expected long-term income.
Watch out for any origination fees, insufficient fund fees, late payment penalties, or any other fees that your lender might slap on your deal. For instance, lenders like Upgrade and Best Egg have competitive APRs, but also charge origination and other fees. One-time fees are easier to manage, but if there are recurring fees, it’s best to check how they might affect your APR.
Lenders will weigh whether or not you’re eligible for a loan through the pre-qualification process. The process entails submitting basic financial information along with a soft credit inquiry, which as The Balance notes won’t affect your credit score. This means that you can get prequalified with as many lenders as you need.
The more pre-qualifications you accomplish, the more wedding loan options you can compare – the easier it’ll be to find the best possible deal. That being said, there’s no shortage of personal loan or marriage loan providers you can use for financing a wedding.
The Best 5 Wedding Loan Options For 2021
With a minimum credit score requirement of 580, Upstart is a great option if you’re still working on building good credit. As the lender’s name implies, they accept borrowers who are new to credit, and can even start funding your loan after one business day. Upstart offers average rates of 6.46% to 35.99% and loans of up to $50,000. Going for Upstart’s AutoPay option, which automatically deducts money from your account for monthly payments, can further lower your APR.
Upgrade also requires a minimum 580 credit score, and also offers personal and wedding loans up to $50,000. Average rates vary from 5.94% to 35.97%, with AutoPay also being an option. Although borrowers need to have a minimum of 3 years in their credit history, Upgrade also allows joint, co-signed, or secured loans. Upgrade also requires an origination fee that can cost anywhere between 2.9% to 8% of the loan amount.
3. Best Egg
With average rates at 5.99% 29.99%, a minimum credit score of 600, and fixed monthly rates, Best Egg is another great option. $35,000 is their maximum amount for personal loans while 5 years is the maximum term. And if you have a credit score of 700 and above, you can qualify for their lowest APRs. They also charge an origination fee, but depending on negotiations, you can get your money within a day.
While you can only borrow up to $40,000 from Marcus, their average rates of 6.99% to 23.7%, zero fees, and fixed monthly payments make them a good option. Marcus loans terms are payable up to 6 years, which can also be done through AutoPay for a lower APR. At a minimum credit score requirement of 630, this lender can be a great option for those with average scores.
Requiring a minimum credit score of 660, LightStream’s rates of 4.49% 20.49% are limited to those with a strong credit history. If you have at least 5 years of maintaining good credit, LightStream can lend you up to $100,000 for up to 7 years at a reasonable APR. AutoPay can further lower that rate.
After you prequalify for any of these lenders, you can start applying for the one with the best terms. This will entail a hard credit check, which will slightly lower your credit score for a short time – so make sure that you’re applying to the right lender. You might also have to answer more questions or submit documents to complete your application, which most lenders can do in one or two business days. Meanwhile, it can take anywhere from a day to several months to get the actual funds, so clarify this with your lender if you need the money fast or on a certain date.
Alternatively, you can pay for wedding expenses through credit cards. But as Forbes’ personal loans guide details, the average interest for wedding loans are typically lower than what most credit card providers can offer. And although there is such a thing as a 0% APR credit card, it’s usually tied to an introductory offer that needs to be paid off within a term you can’t control.
Choose The Right Wedding Loan Option For You
If you need some help funding your special day, consider getting a wedding loan. Keep the above information in mind and you can find the option that’s perfect for your exact wedding needs.
Ashley Paxton is a wedding blogger and a finance nerd. She hopes her articles show that no matter the budget, a great wedding is available to everyone. In her free time, she loves to play tennis.
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