The average cost of a wedding in the United States is $22,000 to $35,000. While some couples have weddings for less than $10,000, the majority of newlyweds host larger events with numerous social gatherings that include an extended mix of family and friends. Specialized unsecured loans with interest rates based on one or both spouses-to-be’s credit may be available. Credit cards with no interest can be cost-effective for brides and grooms with excellent credit and a reasonable spending plan. Local and federal credit unions may have more flexibility when it comes to tailoring a loan’s amount, term, conditions, and interest rate to make it affordable.
Nobody recommends that newlyweds begin married life with debt incurred from a wedding. A far better way to host a dream wedding is to save up for it. Not only will you avoid being indebted at the beginning of your new life together, you’ll also learn to work together to achieve a common financial goal. This experience will be invaluable to your collective financial well-being in the future.
The first step to planning the financial aspect of your wedding is determining your priorities and being realistic about what you can and cannot afford. If you and your partner are planning on buying a new home after you’re married, or if you have other anticipated major expenses on the horizon, you may want to consider a more conservative wedding plan. However, if a dream wedding for you and your families has always been a priority, of course you’ll need to plan a bit in order to avoid running yourself into debt that you can’t manage. First, how much is the wedding going to cost? From a venue, to the cake, to meals for your attendees, to the DJ, weddings are not inexpensive events. At the low end, a wedding with a close circle of family and friends will still cost $10,000 to $15,000. This is a recommended baseline for planning your wedding. Next question: How much of your savings are you committing to the wedding (or, have you saved at all for it)? This will determine how much you need to borrow. Then, do some simple math: What is your current combined household income? What is your current combined household debt? This will give you your current debt to income ratio. If you’re debt to income ratio is less than 10%, you’re in very good shape. If you’re over 20% before the wedding, it’s time to look at your finances. It’s not to say that you can’t take on a bit more of a heavy debt to get married, but if you have other anticipated expenditures that could potentially run you in the the 35-50% debt to income range, a lavish wedding might not be realistic. And, that’s the point of this exercise: Fully understanding your financial position before you plan and finance your wedding. Do not haphazardly take into account how much you might receive in cash gifts from your guests. For all you know, they might all knit you matching sweaters or buy you an automatic bread maker for your wedding gift!
So, you’ve determined that your wedding cost is realistic and you need to finance part or all of it. There are numerous loan options available to you. The most common types of wedding loans are signature (personal) loans and revolving personal lines of credit. A signature loan is an unsecured personal loan that is usually valued at $1,000 to $35,000. These loans are fixed term and fixed interest loans that you pay in installments over time, usually on a monthly basis. The ongoing monthly payment consists of a portion of the principal borrowed amount, interest, and lender fees. The principal loan amount is given to you in full upon approval and you’re free to spend it on your wedding needs. However, it does not replenish like a credit card or line of credit as you pay it down. If your wedding is going to cost more than $35,000, it may be possible for your spouse-to-be or another close relative can take out a second personal loan to offset the additional expense. But, the decision to leverage this option should not be taken lightly. Responsible borrowing is a must when considering your wedding costs.
A revolving line of credit is usually valued at $1,000 to $35,000 and the cash becomes available for your use upon lender approval. The difference between a revolving line of credit and a signature loan is that the revolving line replenishes itself as you pay it off. This means that you’re not tied to a specific loan amount, just a maximum specific line amount at any given time. Personal lines of credit also generally have adjustable rates over time and interest is determined on spending and repayment (i.e. if you carry a higher balance on the line for a certain amount of time, you pay higher interest (or, lower in some cases). If you have average to great credit, this may be a much better option than spending cash or taking out a "hard money loan."
Though a short-term credit card might be an option, using cards to pay for your wedding is not the best option. Generally speaking, credit cards carry much higher interest rates than personal loans and credit lines, and some even have "triggered" higher interest rates if you spend near the maximum available balance. There are some cards with low interest rates upfront. So, if you’re able to pay off the balance and close the card within a specific amount of time, this might be a viable credit source. But, be sure to read the fine print of any credit card agreement to ensure you’re not getting pulled in an unsavory credit relationship.
Once you have received your loan or line of credit, it is very important to stick to your wedding budget. Sites like TheKnot.com have many wedding planning features available, including budget management tools. It is easy to overspend when you’re using borrowed money, so it is important to set and strictly adhere to your financial plan. Whether it’s the card stock for your invitations, or the size of your wedding cake, any additional expenses will add up quickly and potentially create a wedding financial crisis. Wedding loans can also be used for wedding-related costs such as an engagement ring, a honeymoon, or a wedding shower. Be cautious to ensure you don’t run out of money. Some ideas to save money when planning your wedding include:
- Printing your own schedule of events, wedding invitations, table cards, and other print items
- Having a paid bar instead of an open bar (collective sigh)
- Serving finger foods such as canapés and appetizers instead of full entrees
- Downsizing your whole wedding in general and keeping it to close relatives and a tighter circle of friends
- Working with a local designer for the wedding dress or other wedding party apparel
- Getting a smaller ring (your partner likely won’t agree!)
- Having a local bachelor or bachelorette party
Getting a wedding loan is as simple as requesting a personal loan or line of credit with your bank, credit union, or online lender. Most banks won’t advertise “wedding loans” but there are many companies that specialize in unsecured personal loans for such use so be sure to shop around for one that is tailored to your needs. If you have a good FICO score, you should be able to take out a loan with a competitive Annual Percentage Rate (APR) quite quickly. In most cases, you will need the normal types of application data to apply for the loan. This includes details such as your residential address, your employment and income history including pay stubs or annual tax returns, your Social Security number, proof of your monthly rent or mortgage payment, and any other details deemed necessary by the lender. The loan may even be approved and funded within one or two working days.
Tip 1: Temper your expectations. Though we have all seen the movie-like dream weddings online, the fact is that you can have a great wedding experience even without all of the excessive fanfare. Focus on the personal aspects of your wedding instead of what you may feel is socially acceptable and will look good on Instagram. Remember that though this is an important day in your life, it is still just one day (or, maybe a weekend). Setting yourself up for a financial catastrophe due to wedding overspending is just not smart. And, it is a very challenging way to start your new life with your partner.