According to a recent poll, the average Canadian feels a realistic price for a wedding should be just under $9,000. However, recent numbers reveal that the true cost of a Canadian wedding is significantly more, coming in right around $30,000. That’s some serious cash to spend on one day, especially if you’re working with an average budget. To help cover the cost of your big day, you may wonder if you should take out a wedding loan.
Though taking out a loan for your wedding may be appealing, it may not be the most financially sound decision. That said, if you’re set on taking out a loan to cover wedding costs, ensure that you understand the pros and cons first. Use the information shared here to guide you toward the best decision for you, your financial well-being, and your future.
What Is a “Wedding Loan?”
First things first: There is no such thing as a “wedding loan”. If you walk into a bank or credit union and request one, the lender will point you in the direction of a personal loan. As any financial advisor will tell you, personal loans should only be used as a last-ditch resort. The best use for a personal loan is to consolidate unmanageable debt, not to spend money you don’t have.
Pros of Using a Personal Loan for Your Wedding
Cautions aside, there are reasons people turn to a personal loan to cover the costs associated with a wedding:
- It’s quick and easy to apply, and, if approved, the lender will deposit the funds into your account within days.
- You are not limited on how you use the funds. They can be allocated to the venue, photographer, caterer, florist, and more. You can use the funds on any and all costs associated with your wedding, including the venue, photographer, caterer, florist, and wedding invitations, as well as non-wedding associated costs (it is, after all, a personal loan).
- Because personal loans are unsecured, you do not need to put up assets such as your car or home as collateral.
- Personal loans generally have lower interest rates than credit cards.
- Personal loans often come with fixed rates and a fixed monthly payment schedule, so your payment amounts never vary and your due date never changes.
If you keep up with your payments, a personal loan can also boost your credit score. A good credit score can help you and your future spouse make larger purchases in the future.
Cons of Using a Wedding Loan
Though there are fewer cons to taking out a personal loan for your wedding than there are pros, they’re serious enough that they often ultimately deter aspiring borrowers:
- A wedding loan is an extra monthly expense. Depending on how much you borrow, you may have to contribute a substantial portion of your income to paying down your debt, which may make it difficult for you and your partner to save for things that will bring you long-term joy, such as traveling, buying a home, or trying new experiences.
- Though some wedding loans have lower interest rates than credit cards, not all do. If you have a less-than-stellar credit rating, you may have to pay a steeper interest rate. The rates on some personal loans Canada are 20% or higher. If you borrow $20,000, you’re looking at paying an additional $4,000 for your wedding.
- You may have to pay a prepayment penalty if you try to pay off your loan early.
In addition, ultimately, it’s never a good idea to start a new life with another person with significant debt. Debt is among the top five reasons couples divorce. In fact, 80% of couples who part ways cite money troubles and debt as their main sources of contention. When you consider these stats, taking out a massive loan to pay for your wedding seems like a counterproductive thing to do.
How To Pay for Your Wedding Without Going Into Debt?
Your big day should be special, but it shouldn’t lead to financial problems and marital strain for you and your future spouse. The good news is, with a bit of planning and budgeting, you can have your special day while avoiding the long-term stress that debt creates. From lowering your guest count to getting married in an “off-season” to prioritizing how you spend your budget; you can drastically reduce the cost of your wedding. You can also postpone your wedding for a few years to save money. Though you may be itching to tie the knot, the wait will be well worth it when you’re able to enter your union free of debt and the stress that comes with it.
The cost of a wedding can quickly add up, despite your best intentions. When you notice the expenses spiraling out of control, don’t automatically assume a personal loan is your only option. Take a look at your expenditures and determine where you can cut back and, if you have time to do so, save. There are plenty of ways to pay for your big day without going into debt — you just have to get creative.