A wedding is probably the most important occasion in an individual’s life, and no wonder, almost everyone wants a wedding with the works – well at least the bride does!
The national average cost of weddings is $33,391, higher in states like California, you can still make your wedding more spectacular and memorable.
You do you really have to skip eating out and start saving to the extremes for your dream wedding. Fortunately, there are loans designed to help you meet just these types of important needs.
Short term loans can take care of your expenses and help you ensure that the wedding goes smoothly. Here is everything you need to know about using short term loans to pay for your wedding.
What Are Short Term Loans?
As the name suggests short term loans are for a short duration, usually less than a year. This means that your loan will be paid off before your first anniversary. If your credit standing is good, these loans can extend up to 3 years as well depending upon the lender you choose.
Short term loans for the purpose of paying for a wedding fall under the slot of personal loans. These are unsecured loans that require a good credit score to qualify.
The upside is that many lenders (especially online financial institutions) offer lucrative rates which make them cheaper than charging wedding expenses on your credit card.
How Does a Wedding Loan Work?
You need to state the purpose of the loan while applying. Short term loans for wedding can be used towards paying for the actual ceremony, engagement, rehearsal dinner and reception among others. Many lenders categorize this loan under ‘loans for special occasions’.
Interest rates and other terms of a short term loan depend upon your credit history and credit score. You can qualify for the best rates if you have a solid salary and excellent credit. You can bring in your future spouse as a co-signer as well if they have a good credit score.
It is best to look for loans with a fixed interest rate. Generally, short term loans only come with fixed interest rates. However, do not be lured by the initial low-cost of a variable interest rate loan if offered by a lender.
Variable interest rates depend upon market fluctuations and Federal Reserve rates. The rates can easily go the other way leaving you with huge interest payments.
Advantages of Short Term Loans for a Wedding
Short term loans are financially sensible and a wise option when you want to use debt to pay for your wedding. Here are some of the prime benefits of these loans.
1. Quick Loan Disbursal
Short-term loans take comparatively less time to process. Weddings require a lot of planning and handy cash. It is best to apply for a loan beforehand. However, that would mean paying the installments even before your wedding.
These loans can be a saving grace when you want the loan a month before the due date. These loans are offered by most financial institutions online which means you can apply from the convenience of your workstation or the comforts of your home.
2. Less Interest
Short term personal loans come with lower interest payments even when the interest rates are higher compared to long term loans. This is due to the duration of the loan.
On calculating you will observe that loans paid within the year tend to save money even with a marginally higher interest rate as compared to loans with term duration of 3 or 5 years.
However, a shorter term means higher monthly payments. An easy way to never miss on your monthly payments is to create a strategy and stick to it.
3. Budgeted
Short term loans provide a secondary benefit of preventing people from spending more than they planned for. Splurges are very common with a big life event such as a wedding.
You can save yourself from unnecessary debt by sticking to a budget. A short term loan does exactly that. You know how much you have to pay for your wedding and various extravaganzas. You will think twice before over-spending on any single aspect like décor or flowers.
4. Foreseeable Financial Capability
Unlike credit cards, where you charge as you go, short term loans keep you on a tight leash. This means that you know where you will stand in terms of debt a month from your wedding.
Once the event is over and you come back to regular routine, you are not hit with surprise payments. A fixed interest rate loan makes it easier to predict your financial worth through a budget and forecast.
5. Miscellaneous Benefits
Short term loans have always been seen as a champion of providing credit scores with a boost. This can come in very handy when you apply for a mortgage or an auto loan later.
Short term loans do not require collateral as well which means your assets are not at risk. However, you should always plan ahead and never skip on making any monthly payments.
Where to Borrow These Loans?
There are a number of financial institutions including credit unions and banks where you can obtain short term loans to pay for your wedding. Lately, a number of peer-to-peer lending platforms are making headway in the lending business.
These are online platforms which offer excellent rates. Earnest, LightStream, Prosper, and OneMain are just some of the online platforms where you can try for a loan. You could also obtain funds for a wedding using a car title loan or registration loan.
It is important that you apply for multiple loans in a small window period. Personal loans are unsecured loans and require a hard credit check. These checks shave off a few points of your credit score temporarily. Credit reporting agencies consider multiple inquiries as one when made within a short window period.
The average credit score required to qualify for a relatively low APR short term loan is 680. However, there are some lenders who might consider joint applications with individual scores of 660.
You can be approved for these loans with credit score of 600 as well. However, you might lose out on getting low interest rates and terms.
A Wonderful Wedding
There are several benefits of signing up for a short term loan to pay for your wedding. These loans are easy to obtain and the process is quick and streamlined. With a reasonably good credit score, you can shop around for the best rates to have the perfect wedding without worrying about the financial constraints.