Gone are the days when a family’s limited savings meant settling for a simpler wedding. The easy availability of wedding loans has made lavish celebrations more attainable. These personal loans offer instant financial assistance, making them appealing to many. However, these personal loans often come with high interest rates, typically ranging from 10-20%, depending on your credit score, which can significantly increase your repayment burden over time.
“Wedding loans can help young couples manage large expenses like venue bookings, jewellery, or honeymoon costs. As unsecured loans, they require no collateral, making them easier to access,” explains Sanjeev Govila, Certified Financial Planner and CEO of Hum Fauji Initiatives, a financial advisory firm.
However, he advises saving up or seeking family support instead. “Borrowing for a non-productive expense can unnecessarily strain your finances,” he adds.
Wedding loans are increasingly popular as young couples embrace unique and elaborate celebrations, such as destination weddings and theme-based events. These loans allow them to cover immediate costs without depleting their savings. But one needs to exercise caution as it can mean falling into a debt trap from the start of your wedding life.
“Wedding loans often come with flexible repayment options,” says Raoul Kapoor, Co-CEO of Andromeda Sales and Distribution. “But it’s crucial to evaluate whether the cost of borrowing justifies the expense. Couples should only consider a loan if they have a clear repayment strategy and avoid unnecessary extravagance. Post-marriage financial planning is equally essential, as costs often rise significantly after the wedding,” he adds.
Moreover, young earners with limited incomes may rely on credit cards or wedding or personal loans to manage repayments, creating a vicious cycle of borrowing. However, borrowing for a wedding can set a precedent for financing lifestyle expenses on credit. “EMIs (Equated Monthly Installments) reduce your ability to save for crucial life goals like buying a home, a car, or planning for retirement. Begin your married life with love, not loans—debt-free beginnings pave the way for happy endings,” says Govila.
One should be very careful as taking a wedding loan without proper financial planning can lead to a debt trap, especially at the start of married life. “The burden of repaying high-interest loans can impact savings for essential future goals like family planning, buying a home, traveling, or building an emergency fund. Couples should evaluate their financial health and avoid loans that could strain their budget over the long term,” says Kapoor.
What are the alternatives?
If borrowing is unavoidable, consider asset-backed loans like gold loans, which offer lower interest rates compared to unsecured loans. One can also explore creative options, such as crowdfunding or requesting contributions as wedding gifts to reduce financial strain.
Instead of funding a lavish wedding with a loan, consider a simpler celebration. Indian traditions often focus more on personal connections than extravagance. A lavish wedding lasts a day, but loan EMIs linger for years—choose wisely, said Govila
While wedding loans may seem like a tempting solution, the long-term financial implications often outweigh the short-term benefits. “Careful planning and a mindset shift toward moderation can help you avoid unnecessary debt,” says Kapoor.
Fine prints
Prepayment Penalties: Early repayment can attract penalties, locking you into higher interest payments for the loan duration.
Hidden Charges: Processing fees, late payment penalties, and administrative costs can add to the financial burden.
Loan Tenure and EMI: Longer loan tenures may make EMIs appear smaller, but they increase the total interest paid over time.