Client: FotoBox Live
Title: “Should Personal Loans And Credit Become Wedding Loans?”
Source: The FotoBox Live Blog
Word Count: 784
Earlier this month we focused on money and budgeting for 1) an individual and 2) partnerships of all types. The best part about those few blogs is they appeal to wide audience. Anyone single, dating, in a relationship, engaged, newlywed or married can use the financial advice we wrote. For fiancés and fiancées, this blog will be perfect as it deals with paying for your upcoming wedding. There are quite a few newlyweds who have taken out personal loans in order to pay for their wedding. While it is a potentially risky move, we’ll cover how you can take out a loan and ensure your finances are not disrupted.
Are Personal Loans Really Worth It?
Since we heavily stressed budgeting and downgrading your lifestyle to save money, even if only temporary, we won’t tell you to skip those tactics. Given there’s enough time, saving and planning ahead should be the way to go. Otherwise, talking to your bank about a personal loan or opening a line of credit can also work. Deciding on a personal loan or using credit to fund your wedding is absolutely a conversation you need to have with your fiancé.
Personal Loan Lenders
The many personal loan lenders out there perform the same way as a bank would. One main difference between traditional banks and online lenders is that lenders are crowd-sourced. This means the funds are provided by a large group of people. In this case, it’s provided by investors. (Otherwise, it’s considered crowd-sourced fundraising like GoFundMe where funds grow via donations from ordinary citizens). Online lenders deposit funds into your bank account within a few business days of approval and you pay back the loan plus interest like normal. You’re then given a timeline to pay back your loan. Harsh credit consequences await you or anyone who doesn’t pay back in full in the desired term.
As always, do your homework. Here are four separate online lenders you should research if you’re going this route: Prosper, Upstart, eLoan, and Lending Club. For what it’s worth, Prosper has a great smartphone app to help budget and track and flag spending. Sarah Cain, the director of communications at Prosper was quoted in a separate blog saying “Marketplace lending is a newer method, but a quickly growing option for consumers. Credit cards are great for making a purchase at the point of sale, but not a good option for borrowing money long-term. There’s a faster, easier, smarter way to borrow, and being online allows us to be available 24/7.” — Source: The Knot
Most often, financial planners would advise hard against taking out a personal loan to fund your wedding. The reason for this is that you are spending money you do not have. This is what makes saving for a wedding invaluable! Using credit cards to secure wedding purchases follows the same path of a personal loan. You don’t actually have that money lying around. If you did, it wouldn’t make sense to put it on a credit card when you could just buy it … right?
The Caveat To Personal Loans
Taking out a personal loan or business loan for that matter is only feasible if … you have good credit. The light bulb just went off in your head, didn’t it? It’s ironic how it works—you have to have good credit to take out a loan to obtain the cash you don’t have. Essentially, you need to be good with money to get more money. Otherwise, you’re a risk and won’t be able to borrow money. To that end, going the route of personal loan or lines of credit only makes sense if you are smart with money, don’t have enough money, and need a lump sum in a pinch. According to the statistics we’ve posted, that’s a narrow window.
The (Only) Upside To Credit Cards
Credit cards can be a viable option to use for wedding funds if and only if you have the cash to back up your charges. Take full advantage of using credit and paying it off. That way, you’ll be able to build your credit. Additionally, if you have rewards credit cards, you can earn cash back, air miles, discounts, traveling points and more. With that being said, it would not be a bad idea to save up for your wedding with cash. Funnel your cash through lines of credit, while making sure to pay off your balance every month to avoid paying interest. In this way, you’re secure in that your amount of cash dictates how much you can safely charge. That cash in itself is your budgeting already done for you. The only rule now is to stay disciplined!