Stay Away From Wedding Loans
How do children pay for weddings these days? With loans. For a party that lasts one day. The Washington Post studied the practice of obtaining a personal loan to pay for your wedding. While not a surprising read, it is still terrifying.
“People have more debt, they want to get married, but they don’t have the funds to do so,” Earnest’s David Green told the Washington Post, saying that demand for loans to finance weddings has quadrupled in the past year. The article notes that couples borrow an average of $ 16,000 over three years, with interest rates ranging from 7% to 18%. LightStream, SunTrust’s credit service, said its loans helped finance three times as many weddings as a year ago. Similar loans are also available through Prosper and Upstart.
“Whether it’s an invitation with calligraphy or simply non-standard situation, worthy of Instagram, wedding expenses are growing rapidly – and even the most thrifty couples sometimes need extra money” , – said on the page loans dedicated to the wedding, Earnest , tugging at the heart of the bride. or a future groom who just can’t figure out how to agree on their wedding budget.
Why are wedding loans so popular right now?
Here is the perfect storm that makes these wedding loans so popular. People marry at a later age, which means their parents may already be retired and unable or unwilling to contribute, as tradition once dictated. Weddings are becoming more and more expensive: at the last count of The Knot, the “average” wedding costs 34 thousand dollars. And Americans have more student loan debt and higher cost of living. People just don’t save money for the wedding like they used to.
Using a credit card is also common for wedding expenses. But there is something attractive about a personal loan: a monthly fixed payment with a promise of when you will pay it off if you continue the course. The credit card tab may continue to grow as interest accumulates on the remaining balance each month.
Taking a new debt for a wedding is a bad idea.
But a credit card, for all its flaws, can make more sense than a loan. If you are thinking about collecting wedding expenses, you probably already have a line of credit open in your name. And that credit card limit can be lower than any new loan you can get, limiting you to less debt. Even for top quality cardholders, the average credit limit is around $ 9,500, which is much less than the average wedding loan size.
Both loans and credit cards have the same interest rates, and they both send the same signal to debt-averse parties: stay away. Getting into debt for a wedding is not an investment. It’s just life beyond your means.
If you go into debt to buy a home, you have a property that increases capital as the debt is paid off. If you go into debt to buy a car, it will depreciate, but at least you will be able to drive it around town. If you go into debt to buy a wedding, all you get is a party.
What to do instead
If you’re broke and in love, take a look at Lifehacker’s list of everything you can cut out of your wedding and still have a decent time. And if you insist on a more opulent party, can we recommend a cash register ?
You will need a plan for how to spend the money on the vendors and all that DIY decor you choose to do with craft store supplies that you will surely curse later on for the time and hassle it took. But the contribution of people who understand that you are just trying to throw an enjoyable party to prove that your love is the closest you can get from parenting in decades past.