Don’t Marry Debt - The Problem of Wedding Loans
July 15, 2008 · Print This Article
Our major life milestones are what we save up for–emotionally, and, more than ever before, financially. Buying a house, giving birth to a child, sending a child to college, organizing a funeral for a relative–one factor all of these major events have in common is that they cost thousands of dollars. However, lately, weddings have been topping the list of expensive life events in most Americans’ lives.
The average American bride and groom spend almost $30,000 to fund their wedding day. This is mind-blowing cost is just for the wedding itself, and doesn’t take into account all the before and after preparations, such as buying an engagement ring, hiring a wedding consultant, and going on the honeymoon getaway. In some parts of the country, the price of the wedding day can increase up to $50,000–a whole year’s salary for many a newlywed.
As families become more fractured, and as people wait until later and later in their lives to get married, the burden of paying for the wedding increasingly falls on couples that simply don’t have the money. Consequently, there has appeared a new trend among lenders and borrowers: the wedding loan. These loans can provide varying amounts of money to couples, depending on their need. The amount of the loan can range from $1,500 up to the $30,000 range or higher, covering the full cost of the wedding. Couples can get a secured or unsecured wedding loan; it doesn’t matter. Although the interest rate on these loans depends on the couple’s credit rating, it’s in the 10-12% range even in the best scenarios.
Think about it: this is an interest rate comparable to that of a credit card. With that kind of interest rate, you aren’t buying much–the loan is inflexible and the money is gone as soon as the wedding is over. At the same time–especially if you borrowed a high proportion of the money you plan to spend on your wedding–you and your spouse could end up making payments on your loan for years of your married life. You will end up paying thousands of extra dollars in interest.
This is especially discouraging if you and your spouse are saddled with student debt or mortgage payments that you have to make. These other types of debt, while significant, have tangible material benefits: a home to live in, or a high-paying job and diploma on your wall. With a wedding loan, all you’re paying for is the memories of one night. Consider the bleak symbolism here: marriage as continuous payment for one festive night of big spending. Is this how you want to regard your married life?
The fact is, the high interest rates on wedding loans make them a guaranteed source of money troubles further down the line. At the same time, one of the biggest issues couples argue about is money. With a wedding loan, the two phenomena–marriage and money troubles–become linked in the couple’s mind. This can not only cause you to lose money, but can even cast a pall your married relationship.
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