A personal loan is an unsecured loan used to fund various types of expenses, including planned ones. These loans can be small in size when you are to fund an emergency, like medical bills, utility bills, car repairs, etc. When you borrow money for unforeseen expenses, the maximum amount you can borrow is up to £1,000 with a repayment period of up to one month. In most of the cases, the payment is to be made in a lump sum.
However, when you borrow a larger sum, the payment will be made in fixed instalments over a period of time. A large amount can be used for both emergency and planned expenses. The good thing is that your lender will not restrict you from using these loans for any purpose.
It means you can take out a personal loan for wedding. You can use these loans for any wedding-related expenses, whether it is about booking a venue, arranging decorations or catering. However, using a personal loan for a wedding is quite expensive. These loans carry very high-interest rates as there is collateral to back against the loan, and they can be even higher if you are looking for a wedding loan for bad credit.
Though the payments will be spread across a period of months, you will end up paying much more than in interest. Stashing away for a wedding will be much budget-friendlier than a wedding loan.
How to apply for a wedding personal loan?
A personal loan for a wedding from a direct lender is easy to apply. You just need to put in a loan application form online, and then your lender will assess your income details based on the bank statement and income statement that you will submit online, as well as your credit score.
It is crucial to note that lenders will run a hard credit check, so hard inquiries will show up on your credit report and pull some of your credit points that bounce back after making a few instalments on time.
A loan for a wedding with low credit people can be expensive, and the lending sum will also be restricted as there is a high risk of default. Lenders will try to offset their risk by charging higher interest rates and restricting the lending amount.
Once your lender signs off on your application, you will be sent an agreement stating all terms and conditions, interest rates, the loan size and the repayment period. You will have to sign the agreement and submit it back. Once you do so, the money will be transferred to your account.
What are the pros and cons of a personal loan for a wedding?
Here are the advantages and drawbacks of a personal loan for a wedding:
Advantages
Convenience
You can get money this instant. If you run out of money to aid the preparations for your wedding, you can simply apply for them without shifting your focus. Just a few particulars to be filled in, and your job is done. The funds will be transferred the same day.
Better interest rates
With a stellar credit history, you can take advantage of affordable interest rates. However, it does not mean that you cannot qualify for a low credit score wedding loan at lower interest rates. Do research so you can grab the best deal by comparing interest rates. Make your decision after perusal of APRs and the payment term. Thorough research can help you get better interest rates.
A significant improvement in your credit score
Since you will have to make payments over an extended period of time, this will help you boost your credit score. However, this will happen when you make all payments on time. This cannot help you drop off your older queries and defaults, but it will help you have a better credit score when next time you apply for a loan.
Drawbacks
Interest rates will be high
Personal loans for weddings usually carry a higher interest rate, especially in case of little or no credit history. A bad credit rating will also result in expensive deals. Even if you and your spouse-to-be take out these loans jointly, the interest rates will not be much lower if one of you has a poor credit rating.
You will end up spending more
Highinterest rates can increase the size of the monthly debt, and therefore, it can be difficult to manage your debt. Still, if you extend the repayment period, you can reduce the size of monthly payments but will be paying more in interest. Further, if you would like to settle your debt before time, you will have to pay an early repayment charge. All these costs have to be taken under advisement while determining the cost of these loans.
It can throw you in a debt spiral
If you take out a personal loan for a wedding despite a poor credit score, your payments will be high. You likely face difficulties paying off the debt. Do not forget that your financial situation changes like you might lose your job. As a consequence of that, you will have to borrow more to pay off your debt.
If you miss a payment, interest penalties will be charged, which further increases the cost of the debt, and then you will be tied to a debt spiral. Not only will this cause a wreak havoc on your credit report, but you will also face dire consequences of making a default on your loan.
Once the default is made, the matter could be taken to court, and this will show up on your credit file for almost six years, removing all your chances of applying for a loan at a lower interest rate until it drops off.
The bottom line
Yes, you can take out a personal loan for a wedding. However, you should have a good credit score to qualify for good deals. These loans are any purpose loans, meaning you can use them for both planned and unforeseen expenses. These loans can be expensive. It is always suggested that you use these loans only when you are absolutely sure that you can repay them, even if your financial situation is turned upside down.
