Personal Loans for Wedding – Bills to Pay
Wedding loans are becoming more and more widespread in the world. Thus, the analytical agencies calculated that in the period from 2017 to 2018, the volume of loans issued to cover wedding bills in the United States increased by 144%.
The average size of personal loans for bills was $ 10,000.
At the same time, on average, the wedding costs Americans $ 33,000. But newlyweds in the United States prefer not to borrow the entire amount in the bank, trying not to get into credit bondage from the first days of family life. Most often, the loan goes to a banquet and unusual entertainment.
According to the statistics, newlyweds usually take no more than 45% on credit of the total cost of weddings.
But there are times when, in pursuit of a magnificent celebration, young people are ready to commit a crime. So, a resident of Texas robbed a bank for the desired wedding. The man, threatening with a gun, said that he needed the money to pay for the festive banquet and honeymoon. However, the bride herself did not appreciate the groom’s act and made him surrender to the police.
Advantages of wedding loans
Ask most financial specialists (or older relatives) and they will tell you the same thing: Better not to have a wedding that you cannot afford. Or you should postpone the party and save some funds not to take a personal loan to pay for wedding bills.
But if you don’t have the money right now and are confident that you can pay off your loan on time, wedding loans have some advantages.
Interest rates on personal loans can be lower than those of credit cards. Personal loans are a common consumer lending instrument and are often used for debt consolidation because they have lower interest rates than credit cards. For couples who have not saved up the necessary funds to pay for their wedding expenses, a personal loan may be a better option than a high rate credit card.
Responsible use of a personal loan can improve your credit history. Organizations that issue personal loans report timely payments to large credit bureaus – and this is the most important factor in the formation of a high credit rating. Those who make all loan payments on time can take advantage of this.
Disadvantages of wedding loans
As a general rule, financial experts advise avoiding personal loans to pay for wedding expenses.
In addition to making the couple into debt, wedding loans have other disadvantages, including the following:
Missed loan payments can worsen your credit score. As with any debt, making payments on time is extremely important. Missing loan payments can result in the debt being turned over to a collection agency and your credit history being spoiled- 35% of this rating depends on making payments on time.
Monthly payments can prevent you from saving for other financial purposes. Usually, marriage accompanies the purchase of a house – and monthly loan payments can discourage savings for other purposes.
Your debt-to-income ratio will go up. Any loans increase the debt-to-income ratio. Technically, this does not affect your credit rating, but it can prevent you from getting loans in the future – for example, a car loan or a mortgage.
A personal loan will not allow you to accumulate points or get cashback as if you were paying with a credit card. Some credit card holders may strategically pay for their wedding expenses with generous bonus credit cards; Personal loan payments won’t give you the same access to bonuses. However, the points only pay off if the interest rate on your credit card is no higher than on a personal loan.
You can spend more on your wedding than you should. Some online services approve loans in minutes, if not seconds. It is easy to apply for a loan online and it is tempting to borrow more when you are shown larger loan amounts. The fact that you might get approval for a larger loan than you originally planned doesn’t mean you should do it – or increase your wedding budget simply because you took out a loan for extra expenses.
Is a wedding loan right for you? For some, the disadvantages of getting a holiday loan will outweigh the advantages. Consumers should seriously consider how their monthly loan payments will fit into their budget and whether they will be able to handle repayments if unforeseen expenses arise. Personal loans can be a useful tool to improve your credit history and keep big savings, but only if you use them responsibly.
Tags: loans, online loans, wedding