When preparing for their special day, many brides- (and, to be fair, grooms-) to-be never consider being frugal. So perhaps it shouldn’t come as a surprise that, according to TheKnot’s most recent data for their 2014 Real Weddings Study, the average cost of a wedding is $31,213—an all-time high.
You might not have to worry about staying inside your budget if you’re fortunate enough to have someone pay for your wedding, or at least cover a percentage of the expenses. You’ll need to scale back your ceremony and reception if you’re like many young couples and don’t have a lot of extra cash on hand (borrowing from your parents is also out of the question). Even then, you could still want financial support to make your wedding day a reality.
All of your payment alternatives are broken down by our credit experts. Find out which one might be a good fit for you.
How to Use Your Home Equity
If you own your home, you might be able to obtain reasonably priced financing for your wedding expenses through a home equity line of credit (HELOC). It’s possible that the interest rate will be lower than what comes with a personal loan because this sort of borrowing is secured by your property (i.e., a secured loan).
Remember that not all banks these days provide HELOCs. Compare prices. In fact, it’s sometimes advisable to look for a HELOC from your local credit union.
One word of warning: If you don’t pay back your loan, the bank can start foreclosure procedures against you, which will not only harm your credit.
Choosing a Personal Loan
It’s likely that when someone says she’s receiving a wedding loan, she’s referring to a personal loan. This could be a good choice for you if you don’t have any collateral, such as a house. The majority of financial institutions, including regional, national, and even some internet banks, credit unions, and banks, offer personal loans. Your credit history will be taken into account by lenders when calculating the interest rate you will ultimately receive. Your interest rate will be lower the higher your credit score.
Although personal loan interest rates are quite modest, they are nevertheless more expensive than those for a mortgage or a home equity line of credit. That’s because a personal loan is unsecured, which means that there isn’t any collateral held in exchange for lending you the money (like your home).
Even though personal loan interest rates are often in the mid- to upper single digits, they are still much lower than the fees you would incur if you charged your wedding-related purchases to a credit card. This explains why getting a personal loan is always preferable to charging things to your credit card.
Peer-to-peer lenders like Prosper or Lending Club are another option you might want to think about. Compared to banks, these lenders frequently offer lower interest rates. By matching your credit profile with the lowest cost loans that suit your needs, services like Credit Sesame can help you quickly sort through a variety of loan possibilities.
Friends and family financing
Asking for financial assistance to pay for your ideal day was once frowned upon. Nowadays, it’s becoming more and more common to decline wedding gifts in favor of cash. In fact, several internet sites, including OurWishingWell.com, let couples create registries where visitors can simply give monetary gifts.
Not confident in directly requesting money? Think about using crowdsourcing for your wedding (heck, folks do it for anything!). On the crowdfunding website Tilt, for instance, you can use your social network to fund practically anything, even weddings. Additionally, there are additional choices like GoFundMe.com that let friends and family pay for your wedding expenses.
And who wants their marriage to get off to a bad start?
