The pros and cons of wedding loans are not difficult to understand, but they can be very confusing and oftentimes overlooked. These are good loans if you are certain that you will be able to repay them without major difficulty in the future. However, there are also a few cons that may make it more difficult for you than it needs to be. Here are the top four pros and cons for your consideration.
The top pros for personal loans, in general or for those with bad credit, include the following: the interest rate is typically lower than many credit cards, consolidating all your debts, having more money available to you, having more cash on hand to manage your finances, being easier to handle your monthly budget with predetermined payments, relieving the financial burden from you and/or your spouse, and having longer payment terms. For those who are not absolutely guaranteed to have positive credit scores, the benefits almost certainly outweigh the cons when it comes to wedding loans. However, this doesn’t negate the importance of qualifying for a loan with favorable terms. If you do end up getting married and having problems making the payments, it could very well cost you a lot more down the road.
Another top pro is that many of these types of loans are short term and are very flexible. This allows for easier financing options for individuals who want to get married in quickies and for couples without a lot of financial resources. These can often be arranged even faster than the paperwork for a conventional marriage ceremony! In fact, you may be able to have a pre-approved wedding loan approved and begin financing negotiations immediately once you submit an application. This means that couples can still get married, even though they don’t have all the details worked out yet, which many brides and grooms dread.
Another pro is that many times these types of weddings are expected to cost upwards of several thousand dollars. Even with the most detailed wedding plans, most money will need to be raised for this type of event. Some couples opt to use their personal credit cards to finance their wedding loans. Others use small personal loans from family members or friends. Still others work with companies like American Express Small Business Credit Cards and US Trust Money Management to arrange small wedding loans that are almost interest free.
Another con would be that sometimes using credit cards and other liquid cash sources will drain away other funds that could be used for the big day. If you have too much debt on your cards, then you might be putting your marriage at risk. On the flip side, if you have too much cash on your personal loans, you’ll likely be in a bind if your wedding day falls apart before it’s completed. Keep in mind that using any of these means of borrowing will put a strain on your already strained financial situation. Your financial advisor will be able to provide you with the best options that are available to you, depending on your individual circumstances.
One of the biggest pros to paying for your wedding loans with cash is that it will reduce your financial risk. Since you’re paying back the money that you borrow, you can be sure that you won’t be hit by rising interest rates. The reason is that when you pay back the loans, you’ve repaid the interest. The interest rate should remain at the interest rate of the time that you have the money. In short, since most lenders are used to seeing marriages finish after a few years, your interest rate probably won’t be that much higher than many people with excellent credit scores have been paying.