In India, wedding season is no less than any festival and every year lakhs of marriages take place. A big fat marriage celebration in India can extend over a week. From dresses and jewellery to food and gifts, the cost of Indian weddings can be equally overwhelming.
Gone are the days when people used to borrow money from their friends and relatives to tide over the expenses of a wedding. As, nowadays several banks and financial institutions offer personal loan to help you plan your dream wedding. Some private lenders prefer to call them ‘wedding loans’ but they are a part of their personal loan offering. Being an unsecured loan, the rate of interest will be higher than that on a secured loan but it may vary as per the credit profile of the applicant.
- A groom of minimum 21 years and a bride of minimum 18 years can apply for this loan.
- Other factors like CIBIL score, annual income and years in job also influence the approval of this loan.
- Even if your income is less, there are several lenders who offer loans for low income also.
A personal loan in the form of wedding loan can be helpful in the following ways:
- Loan is easily sanctioned and amount will be disbursed to you within 3-5 working days or less making it easier to plan for your wedding in advance.
- You do not need to flash an engagement ring or a wedding invitation card to get approved for the loan.
- Minimal documents are required for the loan.
- Loan amount is higher.
- Loan amount can be used to fund various expenses like decoration, venue, lighting, catering, jewellery, etc.
- Loan can be paid off easily within the tenure you decide.
So, a personal loan might have made it easier for you to arrange that fairy-tale wedding you always dreamed of. But is it really worth taking?
To splurge or not to splurge, that is the question.
Before you decide to take a personal loan for marriage, you must have a clear idea in your mind about what kind of wedding you expect. Ask your partner about his/her aspirations, what type of marriage he/she has pictured. Whether you are a man or a woman, you wouldn’t want your parents to exhaust all their savings on your marriage which they could have saved for their retirement. Moreover, a loan will stay with you for a few years down the line (based on the tenure) and in that period your borrowing capability will be limited.
Let us talk about a few things you should do before taking a wedding loan-
- Prepare a Marriage Budget: Planning the finances in advance is always helpful as in Indian wedding expenses may range from a few lakhs to even a few crores in some cases. Divide the expenses into categories like clothes, venue, caterers, gifts, etc. If you are planning to meet a portion of the expenses with your savings, find out the deficit and take a loan for only the shortfall.
- Check your credit store: Credit score is basically a detailed record of your finances, which is checked by the lenders before offering you the loan. If you have a poor credit score, you might stand a chance of getting the loan in sometime but if your credit score is good, you are sure to get a loan instantly.
- Know about the additional fees charges: Hidden fees charges like pre- payment penalty, processing fee, EMI bounce charge and late payment penalty may be charged. Ask your lender about all these charges before finalizing the loan.
- Discuss terms of prepayment in advance: After marriage, the family income will consist of both your incomes and you might find it easier to pay off the loan in full or part before maturity. Hence, it is always advised to discuss the terms and conditions related to prepayment of personal loan.
- Do not change jobs: People having a stable job are considered to be more creditworthy by the banks. So do not change too many jobs before you plan to take a personal loan.
- Explore other Loan Options: Personal loans are easy and quick but they come with a cost, comparatively higher than a secured loan. You must explore other options such as loan against securities or assets. If your savings can make up for a better part of the expenses, a credit card loaded with benefits can also be of great help.
If you still cannot decide whether taking a personal loan for your marriage is a good idea, you should ask yourself a simple question- “Are we ready to start our married life with a debt?
The answer to this question will depend on your current financial situation- whether you have loans for which you are already paying EMIs, whether you have enough savings for emergency situations or not, whether your credit cards have enough limit and other such scenarios. Look at your combined financial obligations.
A wedding loan can be really helpful in planning your dream wedding. However, you must weigh the pros and cons carefully to find out what is best for you because it will be you and your spouse who will be bearing the loan for a few years.
Also read: 10 Types of Personal Loan You Didn’t Know!