The average price of an Australian wedding costs upwards of $36,000 so it is always smart to search around and understand your financial options.
A wedding loan might be one option you and your partner end up with, but what are they and how can they impact your big day?
Wedding loans explained
A wedding loan is a personal loan devoted to wedding expenses.
Technically, there’s no such thing as a ‘wedding loan’. Many couples take out personal loans to finance their wedding, reception and honeymoon. These loans are colloquially known as wedding loans.
Why would I need a wedding loan?
Weddings are becoming increasingly expensive, and the pressure for couples to hold a glitzy, glamorous wedding is building. Sometimes, couples can’t afford the wedding of their dreams, which is why they consider taking out a wedding loan.
Wedding loans can be particularly relevant for long-distance relationships, especially when one party is based outside Australia. It can be very expensive if the couple has to pay for flights and accommodation for overseas family members. A loan can help ease the burdens of these costs.
There are other reasons why couples might want a wedding loan, but it doesn’t necessarily mean you should get one. Always consider your ability to pay back loans before taking on debt.
What are the alternatives to wedding loans?
There are other options out there for couples who need a little financial leg up when planning their weddings.
Credit cards are one option. You can apply for a Mastercard, Visa or American Express credit card through a bank, credit union or building society. However, please note that interest rates are usually significant higher with credit cards than personal loans, so it might be best to avoid credit cards unless you can pay off the entire debt quickly.
A line of credit might be an alternative for anyone who is unsure how they might pay for their dream day. They work by setting up an overdraw limit on an active bank account. This means you can withdraw more than your normal balance. You will be charged a set interest rate when you access the additional funds and some accounts include extra fees on top of that.
How should I manage a wedding loan?
No one wants to carry around post-wedding debt. Always make sure you can repay the loan when it is due. If you don’t pay back the minimum repayments, you might be hit with hefty penalty fees.
Weddings can be stressful enough without piling on financial debt, so sometimes a wedding loan isn’t the smartest way to handle finances and marriage.
A loan can put strains on relationships and can often be a turbulent beginning to a marriage, but many couples can be responsible and can manage their finances to fit the loan. You just need to measure your own financial situations accordingly.