Are Wedding Loans a Good Idea?

Planning a wedding? Prepare for sticker shock: On average, a U.S. couple spends $33,900 on the big day, according to a 2019 study on weddings from The Knot.

That figure includes the engagement ring but not the honeymoon.

If you don't have tens of thousands of dollars ready to throw at a wedding, you might consider a wedding loan. But engaged couples need to make sure a loan doesn't cause a financial hangover that lingers years after the big party.

Here's what you need to know about wedding loans as an alternative to credit cards and other financing options.

[Read: Best Personal Loans.]

Can You Get a Personal Loan for Your Wedding?

A wedding loan is a personal loan you can use to cover wedding costs. Personal loans generally range from $1,000 to $100,000.

Wedding expenses are one of several reasons that people get personal loans, according to a U.S. News survey. But people are much more likely to take out loans for home repairs or debt consolidation, the survey said.

Weddings are "another marketing approach to a personal loan," says Jeffrey Edwards, certified financial planner and president of Atlas Financial Planning in Irvine, California. The loan "really is treated and handled in the same way."

A wedding loan is unsecured, which means that the interest rate will be higher than a loan secured by property, such as a mortgage or an auto loan. The terms are usually two to five years.

How Can You Get a Wedding Loan?

You may have heard about wedding loans from online lenders. You could get a wedding loan from one of these lenders or from traditional banks or credit unions.

"Essentially, all credit unions offer personal loans," says Mike Schenk, deputy chief advocacy officer for policy analysis and chief economist for the Credit Union National Association. "All credit union members or potential members would have access to a vehicle that could be used to finance a wedding."

Application and approval could be quick. Both could happen within minutes, depending on the lender, and most lenders deliver funds within a week -- some as soon as the next business day.

You can apply for a wedding loan as you would with just about any other personal loan -- by contacting a lender online, in person or by phone. The only difference is that you might apply for the loan on a lender's webpage for wedding loans.

You can get started by prequalifying with a few different lenders to obtain interest rate quotes without hurting your credit score. Then you can choose the lender that works best for your needs, formally apply and accept an offer.

Once you receive your loan funds, you'll need to start making regular payments. That means you could be paying on your wedding loan before your wedding date.

[Read: Best Mortgage Lenders.]

Are Wedding Loans a Good Idea?

A wedding loan could help you avoid credit card debt and relieve stress if you can't afford some or all of your wedding expenses. Still, wedding loans are debt and could strain your marriage.

"For most people, taking out a loan of that magnitude or anywhere near that magnitude as sort of a kickoff to your married life is kind of risky," Schenk says.

He encourages engaged couples considering a wedding loan to answer these questions before signing on the dotted line:

-- How much will you finance?

-- Who will pay for the loan?

-- How will the payments compare with your income?

-- How long do you plan to take to pay off the loan?

Also, take these pros and cons of wedding loans into account:

Pros

You could avoid credit card debt. A 2019 report from WeddingWire found that 20% of couples incurred credit card debt from their wedding.

If you can't pay for your wedding upfront, a loan might be a good way to spread out payments with a lower interest rate than a credit card. The debt also has a set end time, unlike the revolving debt of a credit card.

"The problem with the credit card scenario is that there's no term limit on it," Edwards says.

C redit card debt can drag on forever compared with the term limit for a personal loan.

Make sure to look at the loan's APR, Edwards advises. If you have poor credit, interest rates on personal loans could be similar to or higher than what you'd pay on credit cards.

You could avoid borrowing money from family members. Couples pay for about 45% of their wedding costs, with family and friends picking up the rest, according to the WeddingWire report. You might be uncomfortable asking family members and friends for a loan on top of that, which could be a good reason to pursue funding through a lender.

You could relieve stress. Do you have a strong credit score that can help you qualify for a good interest rate on a loan? You may be relieved to cover your wedding costs quickly and efficiently with a loan, as long as you won't struggle to make the payments.

Cons

You could take on too much debt. A loan might seem like an ideal way to cover wedding costs and put them off for another day. But a loan might overwhelm your budget.

"Couples should look at the shared budget and make sure that adding another payment won't tip the scales and cause undue financial stress," says Jeffrey Arevalo, financial wellness expert at GreenPath Financial Wellness, a national nonprofit credit counseling agency based in Farmington Hills, Michigan.

You could have to delay life plans. Couples might be looking to buy a house, start a family and travel after getting married. All of those plans could be delayed by taking on too much wedding debt, whether it's with a wedding loan or credit cards.

Wedding loans "could severely impact their cash flow, particularly as it relates to student loan debt and mortgage payments," Edwards says. A three-year loan at a rate between 6% and 36% "can have a significant impact on short-term cash flow, especially if you're looking to purchase a house."

Your loan debt could cause stress. Early married life is often filled with adjustments, both personal and financial. Adding an untenable debt load can be a recipe for disaster.

"It really has the high likelihood of producing a lot of stress into a new relationship," Schenk says. "My hunch is that most people are better off to avoid that stress."

[Read: Best Home Equity Loans.]

Can You Have a Wedding Without Debt?

If you need a personal loan because of cash flow issues with wedding expenses, that could point to a larger spending problem, Edwards says.

Couples who successfully manage wedding costs, he says, "identify exactly what they want to do and keep expenses low. They end up doing a very good job of it. But that's because they tend to be much more cost-conscious and financially savvy."

If you need to take control of your wedding budget, a wedding loan might not be the answer.

"Cutting back on expenses is the smartest financial decision in most cases," Arevalo says. "Reducing the size of the guest list or choosing an offseason or afternoon wedding could be ways to reduce costs while still keeping the most important aspects of your celebration intact."

The goal should be to take on as little debt as possible from your wedding to set yourselves up for long-term financial success.

"There are so much better uses for a young couples' money than a wedding loan," Edwards says.