A wedding day is one of the most special occasions of a person’s life. It marks the day of starting a lifelong journey with a partner. Everyone wants to celebrate this day lavishly with near and dear ones. But not everyone saves enough money beforehand to finance their wedding.
A wedding loan is an effective solution as it provides sufficient funds that one can repay in convenient instalments. Here is how loans for wedding work and how they can help with a stress-free wedding.
What is a wedding loan?
Often, a wedding loan is a personal loan provided by financial institutions. One can use the funds to cover the cost of everything from gifts and décor to travel expenses and catering services. Personal loans provide the benefit of quick approval, high-value funds and minimal paperwork.
One can also apply for a wedding loan against property to make their dream wedding become a reality. Like personal loans, it helps to cover any wedding-related expenses without any restrictions. Unlike unsecured personal loans, loans against property interest rates are lower as borrowers provide collateral. So, couples owning a property can opt for an LAP for cost savings.
Reasons to opt for a wedding loan
A wedding day has to be special as this is a once-in-a-lifetime opportunity. While speaking about a wedding loan, one usually means a personal loan or a loan against property for wedding-related expenses.
Both of these loans provide sufficient funds for parents or couples to bear all wedding-related expenses. Personal loans do not require collateral; instead, they are sanctioned based on an applicant’s credit score and repayment capacity. On the other hand, a loan against property is provided based on the valuation of a property.
Opting for a loan for a wedding helps to split a substantial expense into smaller chunks. This provides the scope for wedding couples to repay their amount later on after settling into their new life. Most banks and financial institutions extend a flexible tenure from 12 months to 60 months for these loans.
Wedding couples are advised to set up a wedding budget before opting for a loan. This will help them understand how much loan EMI needs to be paid each month, for how long, and with what rate of interest. If needed, they can use a loan calculator to figure out the right loan EMI and tenure.
Advantages of wedding loans
Going through the advantages of a wedding loan will help to understand whether securing such a loan will be appropriate given one’s financial situation.
Here are some of the advantages of getting a wedding loan:
- Convenience
To reserve venues, caterers, photographers, and florists for the wedding day, one needs to deposit a certain amount. Thus, opting for a wedding loan will help with paying these deposits if there is not much cash in hand.
- Improves credit score
Individuals should borrow money only if they are confident with their repayment capability. Borrowing money helps to increase one’s credit score. If it is possible to take a wedding loan and repay it with ease, it will improve one’s credit score considerably.
- Easy to obtain
If one’s financial records are in the correct place, getting a personal loan for a wedding takes only a few minutes. One should note that LAPs take a longer time for approval.
- Low-interest rates
Using credit cards for wedding purposes is okay but instead, one should opt for wedding loans. They provide a much better interest rate than a credit card. Loans against property are secured loans and carry even lower interest rates.
Documents required for wedding loans
The documents required for personal loans and loans against property are different. Here are the documents required for both of these loans:
- Income proof
- Proof of identity/ residence
- Business proof for self-employed individuals and
- Account statement during the last 6 months
For LAP, an applicant will also need property-related documents including their title deed, encumbrance certificate, etc.
Eligibility criteria for wedding loans
Here are the eligibility criteria that wedding couples must know before they apply for a wedding loan.
- The applicant must be an Indian citizen residing in India.
- The minimum age must be 25 years and the maximum must be 70 years.
- Applicants must maintain a CIBIL score of 700 or higher to get their loan against property for wedding loan approved smoothly.
- Salaried individuals, self-employed individuals and self-employed non-professionals can apply for these loans.
Once the loan against property eligibility criteria are met, the lender will verify the documents and the property to be mortgaged before approving the loan. Personal loans can be approved and sanctioned much faster.
Tips to follow to get a wedding loan
To get wedding loans without any hassle, one can follow these tips:
- Checking credit score first
This is the first and foremost thing that couples should follow before they start applying for loans. Doing this enables them to understand the loan amount they are eligible for. Additionally, they can pick a lender offering them the best deal.
- Getting prequalified offers
There are some reputed financial institutions and banks that provide pre-approved offers to their existing customers. These kinds of offers remain available on several products such as home loans, personal loans and loans against property. Interested individuals can accept such offers on the official websites of lenders by submitting a few basic details.
The main advantage of pre-qualified offers is that applicants can decide whether it’s worthwhile to apply for a wedding loan. Moreover, lenders provide the scope of knowing one’s eligibility without affecting the credit score. That is because lenders only perform soft enquiries for these applications.
- Filling all required details correctly
Once a person decides to take a wedding loan, he/she should fill out the application form with all the correct details. Before approving an application, banks examine the credit of the individual, request financial evidence, and can also ask some questions.
As soon as the application is approved, the loan amount is sent directly to the provided bank account.
- Comparing various loan offers
After deciding to opt for a wedding loan, one must make sure to make a comparison of the interest rates, and fees provided by different banks and NBFCs. Along with this, he/she should check the loan terms, including the interest rate, tenure and other fees.
Thus, one can conclude that applying for a wedding loan is a convenient option for anyone with insufficient funds. One can opt for a personal loan or an LAP to finance their wedding. One should make an informed decision based on the pros and cons of these loans.
Following the above tips helps to get the wedding loan approved in a few minutes and thus wedding couples should plan everything accordingly in advance.
