Everything You Need to Know About Wedding Loans

Despite the outpouring of unsolicited advice that might have some engaged couples feeling uneasy, there’s no “right or wrong” way to plan your wedding. This is especially true when it comes down to everyone’s least favorite topic: Paying for it. Whether you have family members chipping in or you and your partner are paying for it yourselves, each couple’s personal financial situation is different. So while some brides and grooms use cash or credit cards to cover the fees, others turn to loans in order to cover the cost of their nuptials.

Wedding loans are an option to help finance weddings through alternative means rather than relying on high-interest-rate credit cards or using all of your liquid cash. While it's best to try and save money in advance of your wedding, sometimes couples will need to look for alternatives. "I recently got married, and my wife and I started saving money a year and a half in advance to avoid taking out loans, but that may not be feasible for everyone," explains Northwestern Mutual financial advisor Antonio Alva.

Ahead, discover everything you need to know about wedding loans, from how to get one to the pros and cons.

How and When to Take Out a Wedding Loan

Couples who realize the cost of their wedding exceeds the amount of money they have saved or the financial help available to them might consider taking out a wedding loan. Although they can apply for this type of loan at any point during the planning process, Yalitza Brambila, a financial advisor from Northwestern Mutual, reminds them to keep in mind that they have to start repaying the loan as soon as it’s taken out. Therefore, she advises brides and grooms to wait and use their liquid cash to pay for everything they can first before turning to a wedding loan in order to avoid added interest.

"Before making the decision to move forward with a loan, I recommend making a budget," explains Alva. "Look at where you may be seeing a shortage in the budget allocated toward the wedding and expenses for the vendors. Take that shortage and divide it by the number of months remaining until payments are due," he says. "If it’s minimal, I recommend looking for other options like no-interest credit cards, where you could potentially have up to a year to pay it off. That’s a great deal! And it avoids needing to accrue debt. With proper financial planning, loans can be seen as a backup plan rather than the primary option to pay for big-ticket items such as a wedding."

If a couple is ready to take out a loan, the process isn't overly complicated and you can apply online either separately or together. “Similar to a personal loan or a credit card, couples looking to take out a wedding loan would have to apply through a financial institution,” she explains. “Lenders use different criteria when considering applicants and most will provide a quote without running a credit check, so I suggest couples shop around for the best loan terms.”

“Ideally, a couple would want to take out the smallest loan possible, and approval is based on credit score, income, the amount of the loan, and other information requested on the loan application,” she says. “Borrowers with strong credit scores are most likely to be approved and receive the lowest interest rates.” If you decide to apply jointly, this increases your chances of getting approved at the most favorable rate. “This also allows for sharing the responsibility of the loan in a more official way,” Brambila explains.

However, there’s also a third option in addition to applying separately or together: “If absolutely needed, a couple can ask a parent or more established family member or friend to co-sign for the loan to increase their chances of approval,” she says.

Pros and Cons of Wedding Loans

For couples who don’t have access to less expensive financing options, a wedding loan might be a viable solution. "One of the top advantages of taking out a loan is the couple doesn’t need to stress about not having enough to pay for their dream wedding," explains Alva. "Couples who plan sufficiently can be relaxed on their honeymoon rather than stressing about how they will ever pay their loans back."

Brambila recommends going into the loan conversation with the mindset of this type of loan being more of a last resort rather than a quick way to achieve over-the-top wedding day goals. “While wedding loans can be helpful in some cases, couples should try to avoid the need to take out a loan by setting a wedding budget and saving for the big day well in advance,” she says.

If you think that taking out a loan might be the right option for you, it’s important to understand both the benefits and drawbacks first.

Pros of Wedding Loans

• These loans typically have lower interest rates than credit cards.
• Wedding loans offer repayment terms that allow for long-term financing (typically between two and seven years).
• It’s fast access to cash.
• It’s flexible and the money can be spent however the couple decides.

Cons of Wedding Loans

• Depending on the financial situation, couples can be in debt for a year or more.
• Couples may be stuck with a high-interest rate if they are not approved at a favorable rate.
• There can be other fees tied to the loan that borrowers may not expect or consider.
• You will be starting off your marriage in debt.

Wedding Loan Advice

The most important tip that Alva recommends is the following: "My best advice for couples considering a wedding loan is to think like they are running a business together rather than thinking individually," he explains. "I know how important it is to communicate and collaborate on finances." So if you do take a loan, following these recommendations is key:

Don’t overlook the big picture.

“Just because you are getting married, doesn’t mean all of your other responsibilities are set aside,” explains Brambila. “Make sure that your wedding planning allows room to plan for your other longer-term savings goals, like saving for a house, retirement, or starting a family.”

Go into it prepared.

“Plan ahead to come up with a comprehensive timeline, overall budget, and repayment plan,” Brambila says. 

Meet with a financial advisor first.

Whether you set up an appointment virtually or in person, the decisions you make now can have a lasting impact, so speak with an expert first. "A financial advisor can help ease financial anxiety at a time when a couple should be focused on enjoying their special day with friends and family," notes Alva. "I believe goals in life without a game plan are only wishes, and planning for your goals with proper guidance can make them more achievable."