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What is a wedding loan?

Getting married is likely to be one of the most important days of your life, so it's understandable that there might be a fair bit of stress in the lead-up to this special occasion.

No matter the size of your guest list, planning a wedding can be a very costly time in your life as wedding expenses can add up rather quickly. Which is why, even if you work to a strict budget and are perhaps lucky enough to have supportive parents willing to contribute, there may still be quite a shortfall in what you have available. 

If this is the case for you, it might be worth considering whether a wedding loan could be a viable solution. This type of personal loan is for the specific purpose of helping to fund your wedding, and with many lenders offering this type of loan, it could relieve you and your future spouse of some of the stress and allow you both to fully enjoy your special day.

Why do people use wedding personal loans?

Celebrating a marriage is a momentous occasion and many couples want to embrace the opportunity to create a truly memorable event for family and friends. That said, it does come with considerable expense. But if you do decide you want to take out a wedding loan to help cover the cost of your dream wedding, be sure you have the means to meet the loan repayments.

When you think of what goes into making a wedding a success you quickly realise that the costs add up very quickly. According to Moneysmart.gov.au, the average Australian wedding costs $36,000. Some of the many services you'll likely need to consider when planning a wedding include:

  • Venue hire fees
  • Food and beverage catering costs
  • Photography and videography
  • Celebrant fees
  • Music and entertainment
  • Wedding attire
  • Floral arrangements and other decorations
  • Transportation to and from the venue
  • Wedding rings
  • Hair and makeup

Budgeting for a wedding can seem daunting at the beginning, but the best way to start is to reach out to vendors directly for quotes on their services and start compiling a list of expenses. Once you've done your calculations, you'll have a better idea of whether a personal loan is the right option or if it's just odds and ends that your credit card might be able to cover. Either way, ensure you have a plan in place to pay off the debt within a reasonable timeframe to avoid excess interest charges.

How do I compare wedding personal loans?

Obtaining a wedding loan is a relatively straightforward transaction between you and a lender. Once you have an idea of the loan amount you wish to borrow, it's time to start shopping for a loan that best suits your needs. Here are some of the factors to consider when comparing your options:

  • Interest rate: Finding a competitive interest rate personal loan is understandably at the top of the list for most. However, it's important to not only consider the interest rate, but the fees and charges as well, as they can add a significant amount to the overall cost of the loan.
  • Comparison rate: An easy way to get an understanding of the total cost of the loan is to compare different comparison rates. A loan's comparison rate incorporates both the interest rate and the main fees charged.
  • Fixed interest rate or variable rate:Fixed rate loans provide certainty as your repayments will remain the same throughout the loan term, while the interest payable on variable rate loans can fluctuate with the market.
  • Secured vs unsecured personal loan: Secured loans are, as the name suggests, secured on an asset that's used as collateral. Unsecured loans don't have collateral attached, but are seen as a higher risk for lenders and therefore typically come with a higher interest rate.
  • Loan term: The length of time you have to pay off the loan is known as the loan term. Personal loans often have loan terms of one to five years in length.
  • Fees and charges: Some of the common upfront or ongoing fees you might be charged on a personal loan can include application fees, establishment fees, extra repayment fees, early repayment fees plus other monthly fees.
  • Features: Some personal loan products will offer extra features that might be useful to you. For example, if you want the flexibility to make extra lump sum payments when you've got the cash to pay down the loan faster, you might want to consider a loan that offers unlimited extra repayments.

It's important for borrowers to make comparisons between what a variety of lenders offer and gain a good understanding about fees for applying and setting up the loan.

What are the pros and cons of wedding loans?

As with all financial products, it's important to weigh up the pros and cons before deciding what's right for you.

  • Can help you realise your expectations so that you both have an amazing day to remember.
  • Might come in handy when paying deposits to secure your favourite vendors well ahead of time, as you may not have had a chance to build up your savings at this point.
  • Could be a more manageable option than charging your credit card, as personal loans typically have lower interest rates.
  • It's likely you'll be paying off your loan during the beginning of your marriage, so it's crucial that you've got a budget in place to meet the repayments and avoid financial strain.
  • You'll essentially be paying for the wedding after the fact, so keep that in mind when deciding what's actually important to you and what you might be willing to skip.

How can I find the best wedding loan for me on RateCity?

Once you know what you're looking for in a wedding loan, it might be worth utilising RateCity's personal loan calculator. Our personal loan calculator can provide you with a weekly, fortnightly or monthly repayment estimate based on your preferred loan amount, loan term, interest rate and credit score. It can even estimate the total interest payable over the life of the loan. Having this information can allow you to ensure the repayments will fit comfortably within your budget before you submit an application.

Using a comparison table like the one on this page can also be helpful, as you can filter down your search results to see loans that best suit your needs. You can even click straight through using the 'go to site' button to check the eligibility criteria and apply now.

And if you're interested in checking your credit history before applying for a new credit product, consider visiting our credit score hub.

If you'd like more information specific to your personal financial situation, consider speaking to a financial broker or adviser.

Frequently asked questions

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

Can you pay off a quick loan early?

Many lenders will allow you to make extra repayments onto a quick personal loan when you can afford them, or even exit the loan early, which can help reduce the total interest you are charged. Be sure to check your quick loan’s terms and conditions, as some lenders charge early exit fees for paying off a loan ahead of schedule.

Can I get a no credit check personal loan?

Personal loans with no credit checks are available and called ‘payday loans’. These are sometimes used as short-term solutions for cash-strapped Australians. They often carry higher interest rates and fees than regular personal loans, and individuals risk putting themselves into a worsened cycle of debt.

Do $4000 loans have no credit checks?

Many medium amount loans for $4000 have no credit checks and are instead assessed based on your current ability to repay the loan, rather than by looking at your credit history. While these loans can appear attractive to bad credit borrowers, it’s important to remember that they often have high fees and can be costlier than other options.

Personal loans for $4000 are more likely to have longer loan terms and will require a credit check as part of the application process. Bad credit borrowers may see their $4000 loan applications declined or have to pay higher interest rates than good credit borrowers.

Can you get an emergency loan on Centrelink?

When many lenders assess a borrower’s income to determine whether they can afford a loan’s repayments without ending up in financial stress, they may not count Centrelink payments as income for this purpose.

Before applying for an emergency loan, it may be worth contacting a potential lender to find out if they accept applications from borrowers on Centrelink.

Is it hard to improve your credit score?

It can be hard to improve your credit score, as it usually requires sacrifice and discipline, but hard doesn’t necessarily mean complicated. Some simple ways you can give your credit score a boost include closing extra credit cards, reducing your credit card limit, pay off any loans and make loan repayments on time.

As a general rule, the lower your credit score, the more remedies you can apply and the greater the scope for improvement.

Can I get a bad credit personal loan with a guarantor?

Some lenders will consider personal loan applications from a borrower with bad credit if the borrower has a family member with good credit willing to guarantee the loan (a guarantor).

If the borrower fails to pay back their personal loan, it will be their guarantor’s responsibility to cover the repayments.

What can I use a bad credit personal loan for?

Generally, bad credit personal loans can be used for the following purposes:

  • Debt consolidation
  • Paying bills
  • Buying vehicles
  • Moving expenses
  • Holidays
  • Weddings
  • Education

Some lenders restrict how their bad credit personal loans can be used as part of their commitment to responsible lending – be sure to check before applying.

What documentation is needed for a self-employed personal loan?

Personal loans may require a borrower to provide proof of identity, proof of residence, details of any other outstanding loans (including credit cards), details of assets they own (e.g. savings, car, property), and proof of income.

While borrowers in full-time or part-time employment can often provide payslips and similar documents to prove their income, self-employed borrowers may need to provide other documents, such as bank statements or tax returns, to demonstrate that their income can cover a loan’s repayments.

Can I get a $1,500 payday loan with bad credit?

Yes, it may be possible to get a $1,500 payday loan with bad credit. Some payday lenders give loans to people with bad credit histories if they believe the borrower has the capacity to repay the loan.

Under Australia’s responsible lending rules, lenders aren’t allowed to approve $1,500 payday loans if they don’t believe the borrower can make the repayments.

Which lenders offer bad credit personal loans?

Several dozen lenders offer bad credit personal loans in Australia. These are generally smaller lenders that aren’t household names.

How do I consolidate my debt if I have bad credit?

The worse your credit history, the harder you will find it to consolidate your debts, because lenders will be less willing to lend you money and will charge you higher interest rates.

However, people with bad credit histories can make debt consolidation work by following this three-step process:

  1. First, find a lender willing to give you a bad credit personal loan. This process will be simplified if you go through a finance broker or use a comparison website like RateCity.
  2. Second, make sure the interest repayments on your new loan are less than the repayments on the loans being replaced.
  3. Third, instead of spending those savings, use them to pay off the new loan.