Guide to wedding loans

·6-min read
 (Neil Hunt Photography)
(Neil Hunt Photography)

With the average cost of a wedding in the UK having breached the £30,000 mark, unless you’re lucky enough to have a large amount of money squirreled away, you’re going to need to find another way to fund your nuptials.

Bills are on the up, according to the National Wedding Survey 2019, carried out by Hitched, which found the average cost of matrimony had risen to £31,974 in 2019, up from £20,799 in 2014.

The venue, food, drink, honeymoon, and the rings all contribute to the expense. Not to mention the flowers and photographer. It’s a lot for wedding finances to cope with.

Consider a loan

Given the costs involved, one of the popular ways to finance a wedding is with a personal loan.

This enables you to borrow a fixed sum over a fixed period of time – and at a fixed rate.

You’ll have the advantage of knowing upfront how much you’ll pay back each month – and for how long. This can be a good way to spread the cost.

Equally, as personal loans are unsecured, your home is not at risk (as it would be with a secured loan). What’s more, with some lenders if you apply online and are deemed ‘eligible’ you could potentially get the money in your account as soon as the next day.

Related: Compare Loans & Find The Right Deal For You

What exactly is a ‘wedding’ loan?

This is also an unsecured loan, but one with a specific purpose. As part of the online application process, you will be asked why you want the cash. You simply need to state that you want to borrow money to help finance a wedding. (Other reasons to take a loan might include ‘home improvements’ or ‘debt consolidation.’)

Some lenders may take the ‘purpose’ into consideration when making their decision over whether or not to offer you a loan. That said, saying you want to use it to pay for a wedding shouldn’t count against you.

And, once you’ve been accepted, the way the loan works will be the same, irrespective of what you use it for.

How much can you borrow and over how long?

Typically, with a wedding loan, you will usually be able to borrow between £10,000 and £15,000. Some lenders allow you to go up to £25,000.

Generally speaking, you can choose to repay a personal loan over five or 10 years. That said, with a loan of £25,000, you may be offered an even longer repayment period. But while a longer period means lower monthly payments each month, you could end up paying more interest overall.

When taking out a wedding loan, the best approach is to work out what you can realistically afford to pay each month, and then borrow as little as possible over the shortest period.

Interest rates on personal loans

As a borrower, you may be able to find personal loans with a very competitive annual percentage rate (APR).

The key is to do your research and compare rates carefully. When comparing deals, be aware that smaller loans tend to come with higher APRs than larger loans.

The rate you get may differ from the advertised rate

With a wedding loan, it’s important to note that the rate you actually get will vary depending on the amount you borrow and your individual circumstances. This includes your credit rating.

While lenders can advertise low interest rates, legally, these only need to be offered to 51% of successful applicants. The remainder will then be offered higher rates.

To get the very lowest loan rates, you are going to need a squeaky clean credit record.

If your credit rating is a bit patchy, there are some simple steps you can take to improve it. These include getting registered on the electoral roll, ensuring you pay all your bills on time, and taking action to correct any errors on your credit report.

Check for early repayment charges

Be sure to check what the penalty will be for repaying your wedding loan in full before the end of the term. This can often be equivalent to between one and two months’ interest.

Go in with your eyes wide open

While a wedding loan might appear to be a great way to borrow, taking on debt is a big commitment. This is especially the case if you decide to borrow a large amount.

Opting for a wedding loan is not a decision that should be entered into lightly. It’s vital to ensure you can afford to meet all the monthly repayments.

And you need to remember that any debt that you take on will need to be repaid eventually.

Be sure to carry out a soft search

When applying for a wedding loan, you need to avoid making lots of applications in quick succession, as multiple ‘searches’ could leave ‘footprints’ all over your credit file and damage your score.

The best approach is to use an ‘eligibility checker’ tool which enables you to carry out a ‘soft search’ to find out the likelihood of you being accepted.

While this type of search is still recorded on your credit record, lenders can’t see it, so it won’t have an impact on any future applications you make for credit.

What are the alternatives?

  • Save up – to avoid getting into debt to pay for your nuptials, you may want to think about saving up instead. The big upside of using savings is the fact you won’t be charged interest.

  • Turn to the bank of mum and dad – if you are extremely lucky, you may be able to turn to your parents, or another family member, for financial help.

  • Secured wedding loan – if you’re looking to borrow a larger sum of money, you may want to think about a secured loan. With this type of borrowing, you can get bigger sums – potentially £25,000 or more – and have a longer term to repay what you owe. This could be up to 25 years. Rates can sometimes be lower than those on unsecured loans. However, the big word of warning is that the loan will be secured against your home. If you fail to keep up with your monthly repayments, your home could be at risk. You need to tread with care.

  • Put it on plastic – if you’re looking to borrow a more modest sum, you could pay for your wedding with a 0% purchase credit card. This will mean you can spend without having to pay interest for a period. This interest-free window could be longer than two years, allowing you to spread the cost. But note that borrowing limits are much lower than on a personal loan. And, you need to be sure you’ll be able to pay off what you owe before the introductory period is over. If not, interest rates could rocket.

Pay the deposit on a credit card

At the very least, when it comes to funding your wedding, it’s worth putting the deposit on your credit card. This way, you will get protection under Section 75 of the Consumer Credit Act.

Protection under Section 75 applies if you pay for goods or services costing between £100 and £30,000, and you get this even if you only put the deposit on your plastic.

Related: Compare Loans & Find The Right Deal For You

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