What Is a Wedding Loan?

If you’re thinking of borrowing to finance your dream wedding, carefully weigh the pros and cons before signing on the dotted line.

Written by Hilary Collins / September 29, 2022

Quick Bites

  • A wedding loan is a personal loan that’s used to cover wedding expenses.
  • While potentially offering lower interest rates than the average credit card, wedding loans have a high cost in both actual money and emotional impacts.
  • If you have a great credit score and not a lot of debt, borrowing and promptly repaying a wedding loan could have a positive impact on your credit score.
  • If your credit score isn’t great, or if you have a lot of debt and not much income, take a serious step back before borrowing for your wedding.

If you’re planning a wedding, you may notice that the costs of a celebration add up fast. Even with a small wedding or a nontraditional location, the total bill for food, drink, attire, music, venue and more can become overwhelming—and may quickly outstrip your budget.

With the average 2021 wedding running up a total of $34,000, you could be asking yourself, how do we pay for that?[1] If you don’t have thousands of dollars on hand, you might be considering taking out a loan—here’s what to know first.

Inside this article

  1. What’s a wedding loan?
  2. Pros and cons of wedding loans
  3. How does a wedding loan work?
  4. Other ways to pay

What’s a wedding loan?

What we call a “wedding loan” is actually a personal loan that will be used to fund a wedding. Most personal loans are installment loans: You’re given a lump sum of money up front, then pay it back over a specified period.[2]

The amount you’re eligible to borrow, the payment amount, the interest rate and other terms will be determined by your credit score and overall financial situation, as well as the policies of the lender. Some lenders will charge an origination fee as well as interest.

Pros and cons of wedding loans

Let’s actually start with the cons of taking out a loan to finance your wedding—and there are some big ones.

  • The cost of borrowing: When you repay a loan, you’re not repaying just the amount you were handed. You’re repaying interest as well as any fees your lender charged. The average interest rate on a personal loan from a commercial bank was 8.73% as of May 2022, according to the Federal Reserve Bank of St. Louis.[3]

  • The lifespan of a loan: Common loan terms—that’s how long you’ll be making payments on the loan—range from 12 to 60 months. That means as many as five years after you’ve walked the aisle, you could still be paying off your wedding loan. Not only could that cause money stress by siphoning off a large portion of your income, it can make it harder for you to take out a home loan or finance a new car, as lenders will look at your debt-to-income ratio when determining whether or not to loan you money.

  • The emotional impact of a loan: There are also psychological impacts to taking out money to fund your wedding. You might feel that cash burning a hole in your pocket and spend more than you would have otherwise. It’s easy to imagine that if you qualified for a $30,000 loan, despite originally planning to only borrow $20,000, that you’d quickly find ways to spend that “extra” $10,000! On the other hand, having a loan looming in the first years of marriage can be a huge stressor. According to the American Psychological Association, 31% of couples say money is a major source of conflict between them.[4] Taking out a loan before you even say, “I do,” could be asking for trouble.

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On the other hand, there are some upsides to taking out a wedding loan. Here are the biggest ones:

  • You can get the money you need: If you have a decent credit score, it’s very possible to borrow the money you need to have your dream wedding. And these days, it’s usually quick and easy too.

  • Better interest rates than other options: While personal loans certainly aren’t free, they have a better average interest rate than credit cards, at 8.73% compared to 16.65%.[3, 5] If you’re determined to borrow, a personal loan can be a smart way to do that.

  • You may be able to improve your credit score: If you have a lackluster credit score or a history of not making payments on time, you can start to improve it by making monthly payments on time with your personal loan. Even just borrowing a personal loan can improve your credit if it diversifies your “credit mix,” one of the things that comprise your credit score. However—and it’s a big however—taking out another loan if you already have a lot of debt, or missing more payments on this new loan, will obviously impact your score negatively.

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Carefully consider these points before taking out a loan, and discuss them with a certified financial counselor or credit counselor if necessary. Making a bad move with a loan can absolutely haunt you for years to come.

Pros

  • Access to the money you need
  • Lower interest rates than other options
  • Possibility of improving your credit score

Cons

  • Cost of interest and fees
  • Months and possibly years of payments
  • The emotional impact of carrying debt

How does a wedding loan work?

The first step in applying for a wedding loan is determining how much you need to borrow, and how much you can afford to borrow. Review your monthly income and expenses to see how much could be reasonably put towards a monthly loan payment. Then take a look at your wedding budget. You can use an online calculator like Experian's to help you visualize what the reality will look like.

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Then take a look at your credit report to make sure any unfair blemishes can be expunged and to get a sense for what rates you might be offered. The higher your credit score, the lower the interest rates you can qualify for. If you see any mistakes or errors on your report, fix them before you start applying for loans.

Then it’s time to start applying and comparing lenders! If you have a great credit score and a healthy debt-to-income ratio, you’re likely to see interest rates below the 9.41% average, while if you have a lot of debt compared to how much money you make and a fair-to-bad credit score, you’ll likely see higher rates and may be denied for a loan outright.

Reset

Especially if your credit score is low and you already hold a lot of debt, you may not qualify for the amount you were hoping for. If that happens, take a long, hard look at your financial picture and think seriously about scaling back or pushing back your wedding. There’s nothing wrong with a small, personal wedding or waiting another year if you can avoid a disastrous decision that may impact you and your partner for years.

When you’re looking for the best personal loans, compare interest rates, fees and terms to see which is the best option. You can usually save money on interest by choosing a shorter loan term, and some lenders offer low or no fees for personal loans.

There are a zillion places you can take out a personal loan these days, but consider your unique financial situation as well as each lender before you sign on the bottom line. Here’s our list of the five best personal loan options out there.

Company
SoFi personal loans logoVisit
Winner
Winner
Best overall
APRs*
APRs*
7.99% - 23.43%
Minimum credit score
Minimum credit score
680
Visit
Winner
Winner
Editor's pick
APRs*
APRs*
6.74% - 17.99%
Minimum credit score
Minimum credit score
650
Winner
Winner
Best for fair credit
APRs*
APRs*
5.99% - 24.99%
Minimum credit score
Minimum credit score
600
Winner
Winner
Best for good credit
APRs*
APRs*
3.99% - 19.99%
Minimum credit score
Minimum credit score
Not stated
Winner
Winner
Best for debt consolidation
APRs*
APRs*
6.99% - 19.99%
Minimum credit score
Minimum credit score
Not stated

Other ways to pay for your wedding

So, if you’ve decided a wedding loan is not for you, what’s next? Here are two very smart options.

  • Waiting and saving: If a dream wedding is important to you and you can’t afford it now, push it back and use the extra time to save as much money as possible. You could both take on a side gig to sock money away in the meantime.

  • Having a scaled-down wedding: Another great choice, a lower-cost (and often a smaller) wedding can solve this problem. Find ways to scale back, choose lower-cost options and cut the guest list to fit the budget you have on hand.

It’s easy to get caught up in the hype and plan a wedding you can’t actually afford. Take a step back and consider the longer-term implications to your shared future before you take out a loan for your wedding. Regardless of the specifics of your wedding day, the larger reality is the shared life you’ll build together afterwards.

Article Sources
  1. “The Knot 2021 Real Weddings Study,” The Knot, Feb. 15, 2022, https://www.theknot.com/content/wedding-data-insights/real-weddings-study.
  2. “What is a personal installment loan?” Consumer Financial Protection Bureau, Dec. 2, 2021, https://www.consumerfinance.gov/ask-cfpb/what-is-a-personal-installment-loan-en-2114/.
  3. “Finance Rate on Personal Loans at Commercial Banks, 24 Month Loan,” Federal Reserve Bank of St. Louis, July 8, 2022, https://fred.stlouisfed.org/series/TERMCBPER24NS.
  4. “Happy couples: How to avoid money arguments,” American Psychological Association, 2015, https://www.apa.org/topics/money/conflict.
  5. “What Is a Good APR for a Credit Card?” Experian, Aug. 26, 2022, https://www.experian.com/blogs/ask-experian/what-is-a-good-apr-for-a-credit-card/.

About the Author

Hilary Collins

Hilary Collins

Hilary is an experienced finance writer with a passion for turning complicated topics into readable stories with real-world takeaways.

Full bio

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