Every woman wants a lavish wedding of her dreams that she can remember for the rest of her life but, in today’s economy, a dream wedding can leave a huge dent in your pocket. Forget the dream wedding, even an average wedding without a honeymoon can cost more than $35,000, according a report.
So, if you want to make your big day extra special but don’t have enough cash saved up to pay upfront, a wedding loan may be an option to cover the expenses.
Are Wedding Loans a Smart Decision?
It’s hard to tell whether it’s our society that has a marriage fever or the ever-expanding guest list that is weighing down the final cost of the event, but with sky-rocketing wedding expenses, couples are resorting to taking out loans to finance their special day.
But, is this a smart decision or are these couples setting their relationship up for failure by kicking off their married life with a gigantic loan to pay back. Financial advisors dissuade most couples from financing their wedding with a personal loan due to its implications in the long run.
Economists believe that wedding cost is not an appreciating expense and the thousands of dollars spent on one single day provide no real value to the couple. Instead, the money can be used towards buying a home, getting a car or investing for family planning.
How One Couple Financed their Wedding with a Loan?
Wedding loans may make sense for couples who have a steady income and can use the monthly payments to pay off the loan but, if you aren’t sure that you’ll be able to pay back the bank in time, you probably don’t want to kick off your newly married life drowning in payments that you are unable to make.
One Indian couple decided to take a loan to finance their two tradition weddings in, both, the bride and groom’s hometowns. The bride, Amneet Bhurji, said that even though she and her fiance wanted a simple, downsized wedding, their parents had insisted making it a grand affair with a $100,000 price tag. Being a financial manager at a successful firm, Bhurji knew how to take out a loan smartly.
What’s Better: Personal or Credit Loan?
Even though the couple’s families wanted to pay for most of the wedding costs, Bhurji decided to chip in by taking out a personal loan of $20,000. Even though the couple had plenty of savings, they were reluctant to use them since the money was meant for house mortgage.
Surprisingly, the two paid back the entire loan in six months without a trouble and bought a house with the savings. So how did Bhurji manage all of her finances with such ease? She admitted that when it comes to taking a loan, she prefers using credit instead of a personal loan.
She said that when used responsibly, credit can be really beneficial in making lump payments that you couldn’t afford otherwise. This smart move also boosted Bhurji’s credit score which eventually helped her get a mortgage for the house.
Scared to Spend Our Hard-Earned Savings
Bhurji says that key to taking out personal loans is to evaluate if it can easily be paid back in time without dipping into your savings. For her, the money sitting in her savings account was going to contribute to buying a house to fulfill a real need.
She added that one other reason why she didn’t dip into her savings was the psychological effect that it would have had on her. Savings are often seen as the financial cushion that one can fall back on in tough times and if the couple had emptied their account for a fancy wedding, they ran the risk of not buying a house, fearing that they did not have enough money to make the down payments.