Wedding expenses can be overwhelming for your budget. Depending on your circumstances, a loan might be the best finance option. The right loan will help you ensure that everything is in order and be ready for your special day. A wedding loan is a personal loan that you take to cater to your wedding costs. Before you take the loan, there are several aspects that you should consider. Here are a few things to know before taking a loan.
Check Your Score
You need to understand that before a lender approves a loan, they will go through your credit history. They use this to check on your borrowing behaviors and check whether you qualify. To increase loan approval chances, you must pay any outstanding bills on time.
How Much You Need
Before you head out shopping for a loan, it would be best to know the exact amount to solve your financial issues. Therefore, you should have a budget plan to understand how much you can pay and the amount you cannot. It prevents you from taking a larger loan amount than you would require.
Check the Loan Qualifications
You need to ensure that you meet the minimum requirements set by lenders, to increase your chances of getting a loan. The first thing you should check is your debt-to-income ratio. It determines how much money you can spend monthly to pay for your debt. The lower the percentage of your DTI, the higher probability that you will get the loan.
The Interest Rate
Since you’re likely to be spending a significant amount on your wedding, it pays to do your research on interest rates and compare several lenders. Think about the total cost of credit and what you’re comfortable with spending and repaying within your usual budget post-wedding.
Repayment Terms
Under normal circumstances, the longer your repayment term, the higher the interest you will pay in the long run. To minimise how much interest you pay, you should opt for a shorter loan duration if you can afford the repayments. Make sure you read the fine print and choose a loan term that suits you and your financial situation.
Repayment Plan
When choosing a loan, you need to plan on when you intend to pay it. You can consider paying weekly, fortnightly or monthly. The repayment plan you settle for should be suitable for your budget to ensure that you are not straining.
Additional Charges
Notably, interest rates are not the only charges that you should worry about when taking a loan. There are other fees that lenders consider, such as late payment fees. Late fees apply when you delay repaying your loan amount or paying a lesser amount. Some lenders have monthly or annual fees; this is an amount that is paid monthly or yearly, depending on the loan contract. To avoid spending a lot aside from your wedding expenses, ensure to look at the extra charges you will incur from taking the loan.
The Urgency of the Loan
To avoid any delays with your wedding plans, you need to know how soon you need the loan. It is significant to note this as some lenders are fast in loan delivery while others are slow. If you need the loan urgently, compare the different lenders to check how long it takes to disburse the amount.
Choose a Reputable Lender
Note that there are many lenders that you can choose from; however, not all are reliable. It will help if you check the reviews that the different lenders have got from their past clients. It lets you determine whether the lender is trustworthy or not. When choosing a company to loan from, ensure that it has experience in the type of loan you want to get. The final aspect to check is the response of your lender. Make sure that all your queries are answered to avoid any misunderstandings in the future.
Shop for Viable Loan Offer
After you have determined how much your wedding expenses will cost, it is recommended to compare the different loan offers available for you. To ensure that all wedding expenses will be catered for, pick a suitable loan offer.
By considering all the aspects above, you will have an easier time getting and repaying the loan you take to cater to your wedding expenses.
Taking out a loan to cover your wedding expenses can be a convenient and manageable way to have the day you’ll remember and talk about forever without having to delay for years while you save. Of course, a wedding loan is still considered debt, so make sure you’re comfortable with the option you choose and have considered the longer term financial impacts of a loan with your spouse-to-be to make sure you start your financial life together on the same page.
About the Author:
Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals