The current average cost of a wedding in Canada is $30,000. So, it makes sense that couples often look for wedding loans to help offset the costs of such an expensive affair. Because when it comes to weddings, costs can add up quickly.
Between the venue, catering, dress, and music, just to name a few things, the price tag can easily exceed the average of $30,000 for even a medium-sized event. If you’re not careful, you could end up putting yourself into debt to pay for your big day.
One option that you have is to take out a wedding loan. But what are wedding loans, and is taking out a loan the right decision for you? Keep scrolling for answers to all of your questions in this comprehensive wedding loan guide.
What Is a Wedding Loan?
A wedding loan is a type of personal loan that couples can use to cover the costs of a wedding. Wedding loans typically have fairly low interest rates and flexible repayment periods, making them a convenient way to finance a wedding.
Most lenders will require you to have good credit to qualify for a wedding loan, so it’s important to check your credit score before applying. Aside from that, wedding loans are pretty similar to regular personal loans. What’s the difference between the two?
As mentioned above, wedding loans typically have lower interest rates than other types of loans, and they may come with more flexible repayment terms (keep in mind that this ultimately depends on your lender and your financial situation such as your credit score and income).
Like wedding loans, personal loans typically have lower interest rates than credit cards, too. However, both types of loans are not typically secured by collateral, which means that they may be more difficult to obtain if you have bad credit.
What Costs Does a Wedding Loan Cover?
Because wedding loans are a type of personal loan, you’ll find that you can use them for just about anything. While the costs you cover typically need to be related to your actual wedding, a wedding loan can cover things like:
- The venue
- Dresses and tuxes
- DJ or entertainment
If you’re considering taking out a wedding loan, be sure to shop around and compare offers from multiple lenders before making a decision.
Treat the loan like any other personal loan and ensure you’re in a good position to get a good interest rate. Likewise, make sure that you’re in a good financial position to pay back the loan on time.
Can You Get a Wedding Loan With Bad Credit?
The answer depends on several factors, including the lender’s requirements and your credit history. If you have bad credit, you may still be able to get a wedding loan, but you may have to pay a higher interest rate.
In some cases, you may also be required to provide collateral. However, several lenders specialize in wedding loans for people with bad credit. These lenders may be more willing to work with you to create a payment plan that fits your budget.
Ultimately, the best way to find out if you can get a wedding loan with bad credit is to talk to a lender about your options. If you’re finding that you can’t get a wedding loan with your current credit score, it pays to wait a bit.
Focus on building your credit or saving more for your wedding. It’s a tough cycle to break, but taking on more high-interest debt to finance a wedding isn’t a great way to start your married life together. Be patient and wait until that credit score goes up a few points instead.
Pros & Cons of Wedding Loans
There are a few benefits of wedding loans that may make them a good option for you and your spouse-to-be. That being said, they’re not the best option for everybody. Here’s a quick breakdown of the pros and cons of wedding loans to help you make your decision.
Advantages of Taking Out a Wedding Loan
First, wedding loans allow you to plan and enjoy your dream wedding without worrying about your budget. Sure, you’ll eventually have to pay that money back. However, you can have everything you want without compromising because you dont have the cash.
Additionally, wedding loans may have lower interest rates than your credit cards likely do. If you have good credit, you can potentially get a loan with a fixed interest rate that’s lower than most rates offered on credit cards. Save your credit cards for other smaller expenses.
Finally, wedding loans offer flexibility in how you can use the funds. You can use the loan to pay for virtually anything related to your special event, from the venue and catering to the engagement ring and more.
Overall, these types of loans can be a great way to finance the big day while avoiding borrowing money from family members. After all, you’ll be able to access the money you need to make your dream wedding a reality with zero emotional strings attached.
Disadvantages of Taking Out a Wedding Loan
Wedding loans may appear to be a quick and easy way to finance your dream wedding, but there are some disadvantages to consider before taking out a loan.
For one, you’ll have to make monthly payments in addition to your other bills, which can be a burden once the novelty of the honeymoon wears off.
Additionally, wedding loans come with interest charges which can add significantly to the cost of the wedding if you have a low credit score. In other words, using a loan to pay for your wedding means that everything will end up costing more than you originally budgeted for.
If you have great credit then, in this case, it might be worth using a credit card. If you can find a card with a 0% introductory APR period and a high credit limit, consider using that. Spend what you need to spend and pay the balance back on time (you’ll end up spending less in interest).
Aside from potentially being able to enjoy 0% interest rates for up to 12 months, another perk of using a credit card is payment protection.
If, for example, your photographer or caterer doesn’t show up, you won’t be able to dispute that bill with the lender. Credit cards, on the other hand, might offer valuable payment protection in situations like this.
And finally, depending on your credit score, you may be stuck paying off this loan for several years. So while a wedding loan may seem like a good idea at first, it’s important to weigh the pros and cons carefully before making a decision.
Navigating the Wedding Loan Application Process
How do wedding loans work and how do you apply for one? The wedding loan application process is pretty similar to the process of applying for a regular personal loan.
You’ll need to provide some personal details, like your name and address, as well as information about your income and employment history. Lenders will use this information to assess your creditworthiness and offer you a loan amount and interest rate.
Many online lenders will provide you with a quote after a soft credit check, so you can compare rates without affecting your credit score.
Most wedding loans range from $5,000 to $35,000, with terms of three or five years. You might find loans for under $5,000, but if that’s the case then consider whether you need a loan at all. Interest rates will vary depending on your creditworthiness and other factors, but you can expect to pay somewhere between 5% and 20%
Once you’ve found the right lender, you can start the wedding loan application process. Simply gather the required documents and fill out the application form. If you have any questions, don’t hesitate to reach out to the lender for guidance.
With a little preparation, you can easily get through the wedding loan application process and secure the financing you need to make your big day perfect.
7 Wedding Loan Tips
If you think that a wedding loan sounds right for you and your spouse-to-be then sit tight. Before you head off to compare rates and offers, read through these seven wedding loan tips. They’ll help provide you with some guidance before you sign on that dotted line.
1. Determine How Much You Need to Borrow
Before you begin your wedding loan application, it’s important to have a clear understanding of how much you need to borrow and how much you can realistically afford to repay each month.
To get an idea of what you can comfortably afford, review your monthly income and expenses. Once you know what kind of monthly payment you can handle, take a look at your wedding budget to see how much money you’ll need. Try to avoid overspending if you can.
2. Check Your Credit Score
With your budget in mind, it’s time to check your credit score. What credit score do you need to qualify for a wedding loan in Canada? Personal loans are generally available for those with a credit score of at least 600.
However, in Canada, anything above 660 is considered to be a good credit score. We’d recommend you try to aim for a credit score of at least 660 before applying for any type of wedding loan or personal loan.
3. Improve Your Credit Score
What else are you looking for when reviewing your credit score? If you see any odd items on your credit report, contact the credit bureaus to get them removed. Likewise, your full credit report will provide some insight into what’s affecting your score.
If you see that you have a high debt-to-credit ratio, for example, then you’ll know that you need to focus on paying that off. Take a few months to boost your credit score if you need to so that you’re applying for the loan in the best possible financial position.
4. Dont Forget About Fees
It’s easy to get caught up in the wedding planning process and forget about some of the more important details, like wedding loan fees.
Origination fees are common with wedding loans, and they can add up quickly. In addition, many lenders charge late fees if you miss a payment, so it’s important to be aware of all the potential fees before you take out a wedding loan.
By understanding all the associated costs, you can avoid unexpected expenses and keep your wedding budget on track.
5. Consider Fixed Interest Rates
As long as the interest rates are fair, it’s often a good idea to get a wedding loan that comes with a fixed interest rate.
Variable interest rates can fluctuate, which can make it difficult to budget for your wedding. With a fixed interest rate, you’ll know exactly how much you need to pay each month, making it easier to stay on track with your payments.
6. Only Opt for an Unsecured Loan
When it comes to wedding loans, you generally have two options: a secured loan or an unsecured loan.
With a secured loan, you might have to provide collateral and borrow against your car or house, for example. In the case that you can’t make payments, this could lead to big issues like them repossessing your house. That’s no way to start married life.
An unsecured wedding loan doesn’t require collateral, so there’s no risk of losing your home if you can’t make the payments.
7. Always Make On-Time Payments
Finally, remember to always make on-time payments. On-time payments are the biggest factor that influences your credit score. So, when you borrow money, you always want to pay it back on time to keep your credit score up.
If you’re having trouble making payments, reach out to your lender and ask about your options. If you’ve improved your credit score since you took out the loan, you might also look into a consolidation loan.
Apply for a Loan Today
If you’re looking for a way to finance your big day, you may be considering a wedding loan. Wedding loans can give you the funds you need to cover everything from your wedding dress to the honeymoon.
At Loanz, we can help you find the right loan for your needs. We work with a network of lenders to provide you with offers from a variety of wedding loans. And our online application form is quick and easy to complete.
So if you’re interested in a wedding loan, apply now and let us help you find the perfect way to finance your dream wedding.