Weddings are expensive affairs. From renting tuxedos and buying dresses, to hiring venues, a DJ, and caterers, walking down the aisle is a lot more complex than when my grandparents needed a justice of the peace, a witness, and a blood test. As a result, the matrimonial-industrial complex has gotten so big and so competitive that an increasing number of young people are taking out personal loans to finance their weddings – and an ecosystem of lenders has appeared to compete for their business, according to The Washington Post.
The newspaper reported that wedding lending has increased fourfold in a year, and many fintech companies are offering wedding loans, promoting them as ways to pay for items and venues that would look good on Instagram. Couples are borrowing around $16,000 at interest rates between seven and 18 percent.
One reason put forth for the explosion of wedding day lending was that people are getting married later, which means that parents who have traditionally paid most of the cost are sometimes retired and living on fixed incomes. But another big reason is that the cost of weddings is going up.
According to the website 24/7 Wall St, Massachusetts weddings are the fourth most expensive in the country, averaging around $37,000 – over half the state's median household income of $71,000. The average dress cost is about $1,400, while rings cost an average of $4,200. The rest of New England doesn't fare much better: Connecticut is the third most expensive state for marriages, New Hampshire seventh, and Rhode Island tenth.
However, there’s no rule that weddings have to be expensive.
“We’re not taking out any loans for the wedding,” said Flemmings, who is getting married next January. “Our priority was always keeping the wedding within our means and not doing anything over the top.”
“The cost of the wedding forced the both of us to make some financial sacrifices in order to both pay for the wedding and eliminate debts,” he added.
Which leads to another strategy: compromise.
“We initially had to consider bigger and fancier venues, as well as catering, but their cost was forbidding,” said Manuel and Stephanie, who married last October. “For example, we had to change our vision of what we wanted the venue to be – we had considered hotels and orchards and farms – but we also had to increase our budget to accommodate middle-of-the-road venues. Sure, we could have done a potluck reception with paper plates, but we wanted a good experience for our guests, so we managed to find a middle ground.”
Stephanie and Manuel were able to keep costs down by focusing on priorities and not letting themselves get bullied into hiring more expensive caterers or photographers.
Millennials collectively hold about $1 trillion in debt, most of it from student loans. While indebtedness can increase borrowing costs, the article from The Washington Post indicates young people are more open to borrowing than previous generations. The existing debt and high cost of housing and transportation may also encourage people to turn to borrowing, effectively amortizing the cost of the wedding over time instead of paying in a big chunk.
But for those with a steady income and a good credit score, a personal loan can help defray costs and put off paying for the wedding all at once. It’s still important to remember that you do have to pay it off and you will be paying for the money and the use of it. Just be smart about your borrowing – if the interest rate isn't in line with your budget, as sometimes happen, you might want to rethink your plans. You may want to even postpone your wedding in order to save money to put toward it instead of taking on more debt.
If you think a personal loan is the right way for you to pay for your wedding, drop by your local Hanscom FCU branch today, or apply online.
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