Indian weddings have always been a lavish affair, usually extending over a week. A huge sum is spent on the booking the venue, decorator and caterer, and buying clothes and jewelry. The preparations start months before the wedding. However, despite endless planning, it is likely that you will be faced with some unexpected expenditure that you hadn’t accounted for. In such a situation, wedding loans can come to your rescue.
Wedding loans are nothing but personal loans offered by banks and non-banking financial institutions. However, like any other loan, there is an interest cost attached to it. So, if you are planning to take a personal loan, do keep in mind the following points.
Make a Budget
Planning in advance is always helpful. As there is no upper limit on how much you can spend on a wedding (it can range between a few lakhs to a few crores), it is always better you decide your budget and then plan how much you are going to spend on venue, clothes, jewelry accordingly. After deciding the budget, decide to what extent you can fall back on your savings to meet the expenses of the wedding and how much you would need to borrow. Making the budget will help you arrive at the exact amount you want to borrow. You should know the exact amount of shortfall and where you are going to spend it. Always borrow for the shortfall.
Consider Opting for Secured Loan
Wedding loan can be both secured as well as unsecured loan. Secured loan are basically loan against property. You can avail such a loan by either mortgaging an immovable asset or a financial asset such as Fixed Deposit, National Savings Certificate, Kisan Vikas Patra or insurance policy. The rate of interest in case of secured loan generally ranges between 12% and 16% while that of unsecured personal loan ranges between 12% and 24%. Although secured loans are cheaper than unsecured loans but remember that since your asset is mortgaged with the lender, in case of default the lender has the right to auction the asset to recover the money. Also, how much loan you will get will depend on the loan-to-value ratio which in turn will depend on the collateral.
Must Read: Essential Considerations while applying for Personal Loan
Compare Online
Whether you are opting for a secured personal loan or unsecured personal loan not comparing the various options online is not a wise thing to do as you might end up paying higher interest rate. At Paisabazaar.com, you can compare interest rates and other charges, such as processing fee, from all the lenders whose eligibility criteria you meet. Choose the option that best suits you.
Conclusion
In the end we would like to say that the best way to finance your wedding is out of savings. However, there is no harm in taking a personal loan equivalent to the amount of shortfall until and unless it doesn’t strain your finances. As these loans are nothing but personal loans on which the rate of interest goes up to 24%, you should have a repayment plan in place otherwise you might end up starting your new life with a heavy debt burden.