Can’t Afford the Average Cost of a Wedding in Canada: Should You Take Out a Loan?
According to a recent poll, the average Canadian feels a realistic price tag for a wedding should be just under $9,000. However, some quick number crunching reveals that the true cost of a Canadian wedding is significantly more than that, 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 loan.
Though the option of taking out a personal loan for your wedding may appeal to you for a number of reasons, doing so may not be the most financially sound decision you make. That said, if you're set on making a loan your go-to payment for wedding costs, you should proceed only after weighing the pros and cons of doing so. 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?"
Pros of Using a Personal Loan for Your Wedding
• It's quick and easy to apply, and, if approved,
the lender will deposit the funds into your account within days.
• 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
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.