Few events in life stress us out as much as planning for a wedding. One such event: paying for the wedding.
According to a 2016 study released by The Knot’s, the average American wedding costs a little more than $35,000. From flying in family members to paying for a delicious reception spread, weddings take a significant toll on personal finances.
How do people pay for these weddings? The answer might surprise you. Applying for a personal loan has become a popular method for financing a marriage reception.
Credit cards still remain the preferred method to take care of wedding expenses, but a personal loan for weddings has become a popular alternative.
Unlike auto loans or mortgages that are used for a specific purchase, lenders offer personal loans for a wide variety of purposes. You can use the proceeds from a personal loan to pay for a medical procedure or for the family to take a much-deserved vacation. A personal loan for wedding allows couples to leave the money saved in a bank account untouched for expenses required to start a family or put a down payment on a new home. Applying for a personal loan is easy, especially with the recent trend of online banking that offers a one-click application process.
Lenders analyze consumer credit histories to determine whether to approve potential borrowers. FICO calculates consumer credit scores by considering several factors, such as timely bill payments and the number of accounts opened by consumers at any specific time. The three major credit reporting bureaus (Equifax, Experian, TransUnion) use the FICO credit score rating system. FICO has created a five-tier scale for rating consumer credit scores:
Those with good or excellent credit scores may find it easier to secure larger personal loan amounts at more favorable interest rates. Some of the other factors lenders use to analyze personal loan applications include employment status and monthly income.
If you have established a solid business relationship with a financial institution, you should apply for a personal loan with them first. A strong relationship with a bank can lead to lower interest rates. However, you can also consider taking out a loan from a credit union.
Many consumers make the mistake of requesting a loan from a traditional lender who offers lots of different financial products. It can be cheaper to find a specialized lender that only offers the type of funding that you are seeking.
The explosive growth of online banking has made applying for a personal loan in cyberspace a popular financing option. Online lenders often use a different set of criteria to evaluate consumer creditworthiness.
You should know that online lenders may offer higher-than-average interest rates. This can be partly because of the greater risk associated with expedited personal loan application decisions. A handful of online lenders create personal loan packages that are tailor-made to pay for wedding expenses.
Before requesting a personal loan, we recommend getting a free credit report from one of the three primary credit reporting agencies. Under the Fair Credit Reporting Act (FCRA), Equifax, Experian, and TransUnion are required to provide consumers with one free credit report per year.
If you have an excellent credit score, you can ask for more money and more generous repayment terms than a consumer with a fair credit score rating.
You should look at a personal loan the same way you view applying for an auto loan or home mortgage.
You have to negotiate.
Many lenders allow consumers a little wiggle room when it comes to personal loan interest rates, as well as the amount of time required to pay back a personal loan. The timeless advice of “It never hurts to ask” should be your mantra when applying for a personal loan. Remember that you may lose negotiation leverage by applying for a personal loan online.
You should perform research before taking the big step of taking out funding for a wedding. Online reviews will give you insight into a lender’s record of serving customers and offering a favorable experience.
The offers that appear on OpenLoans.com are from companies from which OpenLoans.com receives compensation. OpenLoans.com does not make loan offers, but instead pairs potential borrowers with lenders and lending partners. We are not a lender, do not make credit decisions, broker loans, or make short-term cash loans. We also do not charge fees to potential borrowers for our services and do not represent or endorse any particular participating lender or lending partner, service, or product. Submitting a request allows us to refer you to third party lenders and lending partners and does not constitute approval for a loan.