With the cost of the average Australian wedding estimated between $30,000 – $40,000, having the wedding of your dreams can seem out of reach for many. However getting a loan to finance your big day can make it happen. So what is a wedding loan all about?
A wedding loan is essentially a personal loan, packaged in different ways depending on where you go to get the finance. It can be used to cover the many costs associated with a wedding like the dress, reception, rings, flowers, cake, venue hire and other necessities on the long list of wedding expenses.
Where can you get a wedding loan?
The big banks
The major banks offer personal loans to finance wedding costs. If you have an existing personal loan with a bank, you may also be able to extend that loan to help pay for your wedding.
Specialty providers and small lenders
Specialty providers offer loans branded as ‘wedding finance’ or a ‘wedding loan’. With these specialty packages, they do offer benefits that may be attractive specifically for a wedding, such as a quick approval and payment process for the excited bride who can’t wait to start booking things and making purchases for the big day.
Fixed rate or variable rate?
With a fixed rate loan, the interest rate is set at a specific rate for the term of the loan, however, you may lose the flexibility to make extra repayments without incurring additional fees.
With a variable rate, the interest rate may go up or down over the course of the loan, but you can have more flexibility to pay back extra without incurring additional fees.
Secured or Unsecured?
An unsecured loan is the most common when you’re looking at borrowing for wedding expenses. They do have higher interest rates than a secured loan, as the lender is taking on a higher risk due to no assets being provided as security should you default on the loan.
Some lenders do offer secured loans for wedding expenses, which means you put up an asset such as your car as security against the loan. Because the lender is taking on less risk, secured loans typically offer lower interest rates.
Once you’ve scoped out the different options, before committing to a loan consider what you can reasonably afford to pay back. There are many temptations to spend more and more money on your special day, but you don’t want to start a new marriage off with stress due to money troubles left over from the wedding.
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