How a personal loan can help you say 'I do'
Planning your dream wedding can be an exciting yet expensive journey. From the venue and catering to the dress and entertainment, costs can quickly add up. While savings and gifts may help cover some expenses, many couples turn to personal loans to bridge the gap.
According to the Australian Bridal Industry Academy (ABIA), the average wedding costs $40,700. While many soon-to-be newlyweds stick to a budget, ABIA research found that couples typically blow their big day budget by up to 18%.
And averages being averages, some weddings will cost a lot more than that. ABIA’s Weddings’ Survey uncovered that Australians are willing to spend more than the average to celebrate their special day, as highlighted below:
| Total wedding costs | Percentage of couples |
|---|---|
Less than $20,000 | 24.4% |
Between $21,000 and $39,999 | 30.5% |
Between $40,000 and $59,999 | 23.5% |
Between $60,000 and $99,999 | 16.8% |
Over $100,000 | 4.6% |
What is a wedding loan?
A wedding loan is a type of personal loan that can help cover the cost of your special day, including expenses like the venue, catering, and even your honeymoon. You borrow a set amount from a lender and repay it gradually over a fixed term, plus interest. This type of loan gives you flexibility to spread out the cost of your wedding and related expenses.
Wedding loans typically offer interest rates ranging from 6.00% to 30.00% p.a., depending on the lender and your credit score. These loans can have either fixed or variable rates. Fixed rates provide predictable repayments throughout the loan term, while variable rates can fluctuate based on market conditions, potentially affecting your repayments.
Loan terms for wedding loans usually range from one to seven years. Shorter terms result in higher repayments but lower total interest, while longer terms reduce repayments but increase the overall interest paid.
Additionally, wedding loans may come with various fees, such as establishment, ongoing, exit, and late payment fees. Some loans also offer a redraw facility, allowing you to access extra repayments if you're ahead on your loan.
Best wedding loan interest rate
The best wedding loan interest rate found by money.com.au experts starts at 5.76% p.a. (comparison rate 6.55% p.a.), offered by online lender Harmoney. This is the lowest rate currently available, but keep in mind this rate will likely apply to borrowers with an excellent credit score. The lender's rates range from 5.76% p.a. to 24.03% p.a. (comparison rate 6.55% p.a. to 24.98% p.a.).
Some notable features of this wedding loan include:
- Rate: Fixed interest rate from 5.76% p.a. (comparison rate 6.55% p.a.)
- Ongoing or early repayment fees: No
- Loan amount: $2,000 - $70,000
- Loan terms: 3, 5 or 7 years
- Establishment fee: $275 for loans under $5,000 or $575 for loans over $5,000
- Repayment frequency: Weekly, fortnightly or monthly
- Early repayment fee: $0
How to find the best personal loans for weddings
Just as you meticulously compare options when selecting a venue or caterer, taking the time to consider your wedding loan is equally important. After all, this financial commitment will play a significant role in shaping your postnuptial repayment costs.
Here’s what you should keep an eye out for:
Interest rates
Watch out for what can be deceptively low wedding loan rates you’ll see advertised. Those rates are rarely what borrowers actually get. You’ll need to compare options based on quotes tailored to you. And your other half if it’s a joint loan. Tailored rates will depend on your credit score, income, employment status and other factors.
Fees and charges
The main fees to be mindful of are loan establishment and application fees as well as ongoing fees (annual and monthly). Other costs include extra repayment fees charged by some lenders if you repay more than the minimum, or an early payout fee if you pay off the loan before the set term is up.
Loan term
In terms of desired duration, a wedding loan is the opposite of a marriage. You want your loan term to be as short as possible. The shorter your wedding loan term is, the less you’ll pay in interest and ongoing fees overall. However, it also means higher repayments, so it’s important to choose a term that fits your budget.
Flexible repayment options
Look for a wedding loan that allows you to make repayments weekly, fortnightly or monthly. Being able to make extra repayments on the loan and pay it off early without penalty can also be beneficial. Ideally you want the freedom to make a quick ‘divorce’ from your loan to save on interest.
You should also keep an eye out for late payment fees, which can range from $10 to $30, depending on the lender. Additionally, the loan amount you can borrow for your wedding may vary between lenders, and some may have lower limits if you're self-employed or have poor credit.
Other key considerations about wedding loans
Variable rate
A variable rate loan offers more flexibility, but comes with some uncertainty. Your interest rate could increase, leading to higher repayments, but it could also decrease, reducing your payments. With a variable rate loan, you often have more flexibility, such as the option to repay the loan early without penalty.
Fixed rate
A fixed rate loan offers more certainty, but can be more restrictive. Your rate and repayments will stay the same for the full term. If interest rates go up, you’re protected. But you won’t benefit if rates go down. You also generally have less flexibility to pay off the loan early.
Secured loan
A secured loan is where you use an asset, like your home or car, as collateral to secure the wedding loan. By doing this, you may qualify for a lower interest rate, as the lender has security if you can’t repay. But, if you can’t repay your loan, the lender can sell your asset(s) to recover the costs.
Unsecured loan
An unsecured personal loan doesn’t require any collateral, meaning you don’t need to use any of your assets to secure the loan. While this can offer more flexibility and less risk, the trade-off is that interest rates may be higher or you won’t be able to borrow as much.
Who’s eligible for a wedding loan?
The application criteria for a wedding loan are similar to those for most other personal loans. To be eligible, you’ll generally need to meet the following requirements:
- Be over the age of 18
- Be an Australian citizen or permanent resident
- Be employed or have a regular source of income (some lenders may require you to earn above a certain amount per year)
- Reside at an Australian address
These are the most basic eligibility criteria for a wedding loan. If you meet them, you’ll also need to demonstrate that you’re able to meet the repayment schedule over the term of the loan.
How to get a wedding loan
Here’s a step-by-step overview on getting a personal loan for your wedding:
1
Compare loans tailored to you
Each lender will offer different interest rates, fees, and conditions based on your personal circumstances. Therefore, it’s important to compare wedding loans from multiple lenders to find the best deal for you.
2
Check your credit score
Check your credit score in advance to make sure you're in a strong financial position. You can easily do this online for free through sites like Experian or Illion, which will show whether your score is excellent, good, average, or below average.
3
Fill out a personal loan application
Once you’ve found a suitable loan, complete your application to the lender online or through a broker. Submitting an application will take anywhere from five to 20 minutes to complete.
4
Provide any supporting documents
You’ll need to provide the lender or your broker with a few supporting documents, including payslips and bank statements. Depending on your circumstances, the lender may also need proof of your super income and tax returns.
5
Accept the contract
Wait for your loan application to be assessed and accept the contract once it’s been approved. Your lender or broker will keep you updated throughout the process and you can usually sign the loan contract online.
6
Receive the funds for your wedding
The loan funds will be transferred to your nominated bank account, typically within two business days. You’ll likely receive an SMS or email notifying you that the funds have been disbursed.
The whole process from start to finish may be completed in 1-2 business days. That’s if it’s a straightforward application. For more complicated applications, like a bad credit personal loan or a low doc personal loan for self-employed borrowers, the process will likely take a bit longer.
Wedding loan pros and cons
Pros
- Lets you spread the cost of your wedding over time, rather than draining your savings all at once
- You can typically use the loan for a wide range of wedding expenses, including the venue, dress and honeymoon
- Flexible repayment options, such as weekly, fortnightly or monthly, that can align with your budget
Cons
- Unsecured loans may come with higher interest rates or lower borrowing limits
- Taking on debt for a wedding can add financial stress, especially with a long loan term, as you’ll pay more in interest
- Some lenders charge fees, including application, ongoing and early repayment fees
Get your personalised wedding loan rates
See what wedding loan rates you actually qualify for by comparing multiple lenders at once.
