Are Wedding Loans a Fairy Tale?
Weddings in India are expensive affairs. A typical wedding has various expenses like catering, wedding venue, jewellery, wedding outfit, honeymoon, etc. The average Indian usually spends 20% of their life savings on marriage. An average Indian household spends around Rs. 20 lakhs to 2 crores on wedding ceremonies.
With inflation galloping at an unprecedented rate, wedding expenditures have increased over the years. You may be short of money even if you have been saving up to fund this significant event of your life. If this is the case, you can avail of a wedding loan to meet your wedding expenses. In this article, we will discuss what a wedding loan is, its features, and the pros and cons of availing of wedding loans.
What is a Wedding Loan?
This personal loan helps meet all the wedding expenses. It can be taken out by the would-be bride and bridegroom or by any couple's family members. This loan is free of any collateral and is, therefore, charged a higher interest rate. Like any other loan, wedding loan approval depends upon your credit score.
Various banks and financial institutions provide wedding loans under the personal loan category. Nowadays, countless lenders offer online wedding loan. Applicants can complete the whole loan application procedure online with minimal documents required. Most lenders offer flexible repayment schedules to help the borrower pay off his debt.
Features of Wedding Loan:
- Unsecured Loan: Wedding loans have no collateral requirement, unlike other loan types.
- High-Interest Rate: Wedding loans carry higher risk as there is no collateral. As a result, these loans have a higher interest rate. The loan applicant's credit score also plays a significant part in levied interest rates.
- Eligibility Criteria: Each lender has its eligibility standard. Age, employment history, income level, credit score, etc., are some measures of an individual's eligibility.
- Hassle-free Application: The application process for wedding loans involves very little paperwork. The typical documents required include proof of age, identification proof, address proof, pay slips, etc.
- Quick Disbursal: If approved, the loan amount disbursal is quick. The process of loan application and disbursal is entirely online. This loan can be, therefore, regarded as an instant loan.
- Loan amount: The maximum loan amount available depends upon various factors like your income level, credit score, employment history, etc. The disbursed loan can range from Rs.10,000 to Rs.40 lakhs.
Pros and Cons of Wedding Loans:
- Wedding loans enable you to achieve your dream wedding. You can organise and enjoy your wedding with as much fanfare as you desire.
- The application, approval and fund disbursal of wedding loans is online. Combined with the low paperwork required, it ensures that the whole procedure is a hassle-free experience.
- You need not liquidate your savings and investments to fund the wedding. It ensures that the assets accumulated over your lifetime don't go to waste. There are even chances that your investments will go up. Since you have not sold out your assets, you can benefit from the capital gains on your investments.
- The loan repayment tenure of wedding loans is typically flexible. You can plan your repayment schedules according to your convenience.
- Wedding loans provide you with a chance to boost your credit score. If you had planned out the repayment rate depending on how much you can pay each month. You can repay the monthly amount due on time and improve your credit score.
- You must repay the loan amount availed under wedding loans monthly. It means organising your monthly budget to afford the repayment. You may have to forego some monthly expenses to pay the EMI.
- If you have a bad credit score, the interest rate imposed on your personal loan will be high. It will require you to pay more.
- Wedding loans can be a debt trap if you are not careful. You may overspend and take on more debts than necessary.
Wedding loans are instant personal loans that you can benefit or suffer from depending on your actions. It is an excellent way to fund your wedding expenses if you have a good credit score and don't overindulge.
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