In 2022, the average cost of a wedding was $30,000, according to The Knot. If you are spending anywhere near the average amount, you will need a whole lot of money in savings to cover that cost.
If you don’t have the funds in your checking account to pay out-of-pocket, you’ll have to decide if you want to borrow to fund your nuptials. And you may want to consider whether a personal loan is the best approach to doing so.
To help you decide if paying for a wedding with a personal loan is a smart choice, be sure to ask yourself a few key questions.
Can you scale down your wedding plans and avoid borrowing?
Borrowing for a wedding is something you may want to do in order to have an amazing day. But, if you can have just as special of an event without taking on debt, you’re better off doing that.
Consider what’s really important to you. Could you cut your guest list to have only close family present? Do you want the fanciest of food or would simple dishes do? Does the wedding really need to be at an expensive venue or would booking a cheaper place allow you to pay cash?
If you can find ways to keep the magic but avoid the borrowing, you’ll likely end up a lot happier over the long term when you aren’t making wedding debt payments for years to come.
How much will a personal loan cost you?
The average interest rate on a personal loan was 11.48% as of May 2023. If you borrow at the average rate, take a $30,000 loan to cover an average cost wedding, and pay your loan back over five years, you would be looking at a monthly payment of $659.48 and would end up paying back $39,568.62 over the life of the loan. That includes $9,568.62 in interest costs.
Since you’ll end up borrowing, you need to be comfortable with the cost that your wedding is going to be about $10,000 more than the amount you actually paid due to interest charges. And you will need to be OK with the fact that you’re committing to make a pretty large monthly payment for the next half decade of your life.
If you are not comfortable with this, you’ll need to think again about whether you can scale down your wedding to avoid such a big financial commitment.
What other options are available to you?
If you absolutely want a big wedding and need to borrow for it, you can also consider what other options are available to you.
Personal loans tend to be one of the more affordable ways to borrow. By contrast, the average interest rate on a credit card was 20.68% as of July 10, 2023. So, if a card is your only other option, a personal loan would be a better bet.
But, if you could borrow from your family and not pay interest (or damage your relationship in any way by borrowing) then you could save quite a lot of money. Or if you could find a way to work more and bulk up your savings account so you don’t have to borrow, this could be a better option for you.
How will your personal loan payments impact your other monthly goals?
Finally, you need to consider the trade-offs you’re making to take on wedding debt. For example, will you have to put off buying a house because you’re making those monthly payments?
You may decide that these trade-offs are worth it. But be sure to really think about whether starting your married life with wedding debt is the way to go or if you’d rather do something else instead like having a cheaper wedding or saving longer before you get married. Only you know what’s best for you, but don’t jump into borrowing without giving careful thought to the opportunity cost first.
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