It should be unique, unforgettable and simply wonderful: You have very precise ideas about the “most beautiful day in your life”. Perhaps you have a big celebration in mind with the whole family and many friends and acquaintances. Maybe it can also be a small and very exclusive event in a special place. Whatever your ideas about your perfect marriage – with a loan, even wishes come true that you may not be able to afford from existing reserves.
If a wedding loan is planned wisely, you can fulfill your individual dreams and still be debt-free in the foreseeable future.
Do loans make sense to finance a wedding?
Financing experts and bank advisers often recommend that you only start financing for things for which you will receive a value-retaining item in return. If one follows this maxim, the purchase of a car (eg via a car loan) or the purchase of new home furnishings can be financed well (usually realized through a consumer loan). On the other hand, a big trip or wedding celebration are less likely. This approach is understandable against the background that financing usually has a term of several years.
The rule of thumb is that you should use the funded item for at least the duration of the loan. On the other hand, a trip or a celebration is fleeting. However, this advice from the financial experts does not necessarily have to be followed.
Of course you make a long-term financial commitment with your financing. You have to reliably pay the loan rate to the bank every month and have the budget at your disposal. However, thanks to the low cost of financing, it is now quite common to finance “ephemeral” things, such as a wedding party. If you tailor the loan agreement to your individual financial options, you will receive flexible and affordable financing that leaves you enough scope for everyday life with your small family.
What questions should you clarify before signing the contract?
Before you sign the contract with a bank, the most important criteria of your financing must be checked. This includes:
- the amount of the loan
- the length of the term
- Payment of special repayments
- the amount of the monthly loan installment
- the funding fees
What you should pay attention to in detail can be found in the next paragraphs.
How much should the loan amount for wedding financing be?
On the one hand, when calculating the loan amount, you have to make sure that it is sufficient to finance your celebration. Otherwise, in the end you will still be forced to use your reserves or make concessions. On the other hand, it should not be too high, because you obviously want to repay your liabilities as quickly as possible. On average, the cost of a wedding is between 10,000 and 20,000 dollars, and there are of course no upper limits.
Therefore, try to calculate the financing amount as realistically as possible. Get offers for your event and make a pre-selection. If you want to partially use your own funds, subtract them from the calculated loan requirement. This is how you get the necessary loan amount. If you need help with the cost breakdown, see How much does a wedding cost? a list of the costs incurred.
How long should the term be?
The term directly affects your monthly loan installment. The longer the financing is repaid, the lower your monthly rate. If you want to be debt-free as soon as possible, set the credit rate as high as your monthly budget allows. This is how you shorten the contract term immediately.
What needs to be considered for special repayments?
Special repayments are repayments for your liability that you pay in addition to the monthly loan installment. This reduces your remaining debt. Most banks accept special repayments without charging a prepayment penalty. Your credit rate remains constant per month, but the financing is paid back in full earlier. You can always make special repayments if you have saved a certain amount, although some banks require a minimum amount as special repayments. When comparing bank loans, pay attention to the conditions your donor demands for special repayments. You can find out more here.
How much can the monthly loan installment be?
As a guideline, the monthly rate for your financing should be set so high that on the one hand you can pay it securely over a longer period of time and on the other hand you pay off as much as possible. You can determine the monthly credit rate by comparing your monthly expenses with the income. Your earnings should of course be higher than your expenses. You can estimate around 80 percent of the excess amount as a monthly loan installment.
What are the fees for the bank loan?
In the first place, the interest for your financing will be charged. They represent the costs you pay for the bank’s service. Added to this are the fees that the bank charges. The best way to get a feel for how high the fees are to look at the fixed interest rate and the effective interest rate per year. The smaller the difference between the two interest rates, the lower the fees. Incidentally, the banks may not charge processing fees for wedding financing, so you should make sure that the bank does not charge them in comparison. Simply use our loan calculator and compare numerous online loans here without fees.
At what time should you apply for wedding funding?
So that you can continue the preparations for your wedding, you should not apply for the wedding credit just before the event. Remember that processing and payment takes a few days. It can easily take ten to 15 working days from the application to the transfer of the money. Therefore, make your loan application as early as possible.
Does residual debt insurance make sense?
With large loan amounts and long terms, residual debt insurance can be sensible. The financing bank may even ask you to provide appropriate protection. However, it may not require you to take out this insurance with a particular company. Compare the prices and benefits of the residual debt insurance before you conclude the contract.
Why is it important to compare wedding credits?
The conditions of the banks for your wedding financing differ enormously. A comparison will help you find the right financing for your needs at low interest rates. You can carry out a credit comparison online quickly and conveniently. We you can compare many loan offers in detail and choose the bank that best suits your individual wishes and options.