The short version
- A wedding loan is a personal loan used for the wedding, usually unsecured.
- Work out the total cost, interest included, before you set the budget.
- Saving even part of it first cuts what you pay in interest.
Paying for a wedding with a personal loan
A wedding loan is a personal loan used for wedding costs such as the venue, catering, rings or the honeymoon. Any general-purpose loan above can be used this way, and most are unsecured.
Borrowing spreads the cost, but you'll be paying for the day for years afterwards. Set a budget first and borrow only the gap your savings can't cover.
How to compare wedding loans
Look at the comparison rate as well as the interest rate. The comparison rate adds the lender's standard fees to the interest rate for an example loan, so it shows the cost of two loans on the same footing.
Then look at:
- Fees. Check for establishment fees, monthly fees and any fee for paying the loan off early.
- Extra repayments. If you can pay extra without a fee, cash gifts from the day can go straight onto the loan.
- The term. A shorter term costs less in interest; a longer one lowers each repayment.
- The amount. Make sure it covers what you need and that the repayments fit your budget. Money stress is a hard way to start married life.
Alternatives to a wedding loan
- Savings. Saving in a high-interest account in the months before the wedding means no interest to pay and no debt afterwards.
- A credit card. A low rate or 0% purchase card can work for smaller costs you can clear before the offer ends. A rewards card usually charges more interest than a personal loan.
- Family and friends. Some couples ask for contributions to a wedding fund in place of gifts.
- Supplier payment plans, which may have no interest.
Pros of a wedding loan
- You can pay for the wedding you want without waiting to save the full amount.
- The cost is spread into fixed repayments, which can make it easier to budget.
- Repaying on time adds positive history to your credit report, which can help with later applications such as a home loan.
Cons of a wedding loan
- Unsecured loans have higher rates than secured ones, so the interest adds up.
- A secured loan puts what you offer as security, such as a car, at risk if you can't repay.
- If one of you loses income, the repayments can become a strain on your finances and your relationship.
What you'll need to apply
Most lenders ask for the same things, and having them ready speeds up approval.
- Proof of identity, such as a driver's licence, passport or Medicare card.
- Proof of income, usually your last two payslips, or tax returns and financial statements if you're self-employed.
- Details of what you spend each month and what you already owe, including credit card limits.
- Your address history and, for a secured loan, details of the asset you're offering as security.