The average cost of a wedding is around £17,000, and one major bank estimated that in 2005, approximately £467 million worth of personal loans would be taken out solely to fund the expected 260,000 weddings. And the amount of money people spend on weddings is steadily rising at a rate of ten percent per year.
Almost one quarter of couples tying the knot will take out a loan to pay for wedding expenses. One study indicated that 34,700 couples taking out will be wasting as much as £1,100 in interest payments that could be better used for the wedding or honeymoon.
Because many couples do not have an extra £17,000 lying around, personal loans are one of the primary funding methods for the big day. However, because couples are not doing their homework and shopping around for the best loan, they could collectively pay up to £13 million in surplus interest payments.
Interest rates differ greatly from one loan to the next, and among various lending institutions. Therefore, it is extremely important that couples investigate their options before signing the papers.
Many couples opt for a personal loan because they are not prepared financially to cover the cost of the wedding. However, this can cause immediate financial stress on a new marriage.
Some couples who were unprepared to take on the financial burden have resorted to selling family heirlooms or taken up gambling in an effort to raise the necessary finances. This can obviously be a stressor on a new marriage, so in order to potentially avoid impending divorce over the debt, couples may want to consider financial planning as far ahead in advance as possible.
Other risks include the items stored in the couples' homes prior to the wedding, including the bride's dress, flowers, food, and gifts. Should any damage or burglary occur prior to the ceremony, many couples are unprepared to cover the expense. Therefore, couples should check with their insurance providers to ensure that they are adequately covered.
Some experts recommend couples work with a financial advisor to determine their best funding options. Couples may also want to consider opening a savings account specifically for wedding plans and related expenses.
A secured loan is an option if the couple has collateral to use against the loan (typically a home or automobile). usually have less interest than unsecured loans (such as credit cards). Careful planning and budgeting for the wedding is also useful in keeping expenses within a reasonable amount.