The most important day of your life can be very expensive. From the dress and the venue to catering and wedding cars, your special day can cost you upwards of $50,000. If you don’t have that money saved, you may be looking at other ways to finance your wedding. Our guide below details the different loan options you have available and how to find the right one for you.
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Loans that you could use to finance your wedding
What are the different wedding loans and how do they work?
Couples looking for a way to finance their wedding have a few loan options to choose from. The option you choose will depend on your current financial circumstances, the way you want to use the loan, your outstanding debts and active credit accounts. Here are the options you may want to consider:
As the loan will be used to finance personal items, you may want to consider an unsecured loan. These loans place no restrictions on the way you use the amount, so you can use some of it to buy a dress, book a venue and even pay for some of the honeymoon. You are able to choose between a variable and fixed rate loan option, and can usually borrow the money for between one and seven years.
A line of credit may be an option if you are unsure whether you will need to borrow money. Lines of credit work by you setting up an overdraw limit on one of your active bank accounts, and from there you are able to access money up to and including that amount. You will be charged a set interest rate when you access the additional money, while you may also be charged fees to have this feature available to you. You can talk to your current lender to see if this option might be a good choice for you.
If you already have a credit card with a competitive interest rate and find that it will be of better value than a loan, then you may want to consider using your credit card to make wedding-related purchases. If you are planning to put a few purchases on your card you may want to consider a 0% p.a. purchase card, or if you accumulate debt on your credit card you can also transfer your debt over to a 0% p.a. balance transfer credit card. Keep in mind the limit of your card and whether this will be enough for you.
- Bad credit personal loans
If you’re one of the thousands of New Zealanders who suffer from an impaired credit score then there is still hope for you to afford your dream wedding. You could be eligible for up to $10,000 with a bad credit wedding loan provider. There are some lending companies in New Zealand that look past a bad credit history and lend you money. Whilst you may not get the whole $10,000 you are looking for, it could be the difference between your dream wedding and a nightmare.
How you can compare wedding loans
- The features on offer. Some lenders offer features on a loan that can help you save money. For example, some may allow you to bundle a personal loan with other financial products to get a discount. Other lenders may have flexible repayment options, or if you opt for a credit card you may be able to earn rewards points for your purchases. Take a look at some features offered by these lenders and see if any of them appeal to you.
- Flexibility of the loan. The flexibility of this loan should suit the way you plan to use it. For example, you should check if you are able to repay the loan early, or if you will be able to extend the loan or opt for an ‘interest-only’ option if you are struggling to make your repayments.
- Repayment options. This is a feature that can help reduce the amount of interest you pay on your loan. Some lenders may let you make additional repayments, but they may charge you to be able to do this. This can offset any benefit you get from making the extra repayments, so check the associated fees before you apply.
- Fixed or variable interest rate. There are benefits and drawbacks to both of these rate options, and the one you choose will depend on a few factors. A fixed rate option can help you plan your repayments because you know what they will be over the course of the loan, but this may also mean you miss out on lower interest rates. Fixed rate loans are usually available for a maximum of five years. Variable rates fluctuate over the life of the loan, which makes it hard to budget for the repayments. However, these loans are generally available for as long as seven years and you may also save money from lower variable rates.
Things to consider before you take out a wedding loan
Before applying for a wedding loan it’s crucial to understand the financial commitment required for servicing the borrowed amount. You and your future partner should sit down and discuss your financial situations beforehand. Below are some of the questions you should be discussing.
- What are the fees that you’ll be charged?
When you look at the fees of a loan you should remember to check the upfront fees as well as ongoing charges. Upfront fees cover the cost of setting up the loan, for example establishment fees, and ongoing fees can include monthly account-keeping fees or amounts you will be charged for using some of the features of the wedding loan, such as making additional repayments. You should also be aware of late fees and any fees which may apply for paying back the loan amount early.
- What interest rate are you being offered?
When looking at the rate offered by the lender, make sure to check whether the rate is fixed or variable. You can also see if the lender offers an introductory rate that can help you save money in the first stages of the loan.
- Is the wedding loan amount and terms affordable for you both?
You need to ensure that the amount you want to borrow and the length of time you want to borrow it for is offered by the lender. You can check the minimum and maximum loan amounts each lender offers and see if they suit your needs.
Other financial obligations to consider for your wedding
Whether you’re having a small ceremony, or an all-out extravaganza for your big day, there is always going to be a range of items and services you may need finance for. Consider the expenses below:
- Engagement party invites
- Engagement party venue
- Engagement party food and drinks
- Hen/stag party and bridal showers
- Wedding invites and thank you gifts
- Wedding dress and accessories
- Bridesmaids dresses and accessories
- Groom/groomsmen suits and accessories
- Flower girls, ushers and pageboys
- Wedding location/church and marriage celebrant
- Reception location, catering and decorations
- Photography and videography costs
- Entertainment considerations
- Makeup, hair, beauty treatments for the bride and bridal party
- Transport to and from the wedding
- First-night hotel stay
How you can apply for a wedding loan
To apply for a loan in New Zealand you will generally need to be over the age of 18 years, be a permanent New Zealand resident and have a good credit rating. There are also bad credit personal loan options available. When you apply, you will need to provide the following:
- Personal details including your name, age and proof of your identity
- Financial details including your assets, debts and liabilities
- Employment details including your income and the name and contact details of your employer
There are ways to finance your wedding when you don’t have the money available. Compare your options and make sure you’re applying for a loan that’s competitive and affordable to you on your budget.