18-Jan-2016 written by : FSI-Team
With the average wedding costing upwards of Rs. 20 lakhs (or more!) these days – and that’s not including the honeymoon! – it is no wonder that personal loans are increasingly popular to fund the wedding of your dreams. While a wedding should be a joyful occasion, it can be stressful for the couple and their families to put the whole thing together, often stretching finances beyond what had been budgeted. To avoid this strain, an increasing number of people are choosing to opt for personal loans, simplifying things and at the same time going all out to celebrate.
Globally, there are financial service providers offering what are known as ‘wedding loans’ that provide finance for engagements, weddings and honeymoons. Some even provide individuals with bad credit scores with wedding loans, in order to make their big day special. However, essentially these all fall under the category of personal loans, however you choose to dress them up, and a financial institution will evaluate you (the borrower) accordingly. In India too, some financers offer personal loans targeted exclusively at weddings,
An unsecured loan product (that is, you do not have to provide any collateral security when availing this loan) that is offered by most banks and financial institutions, a personal loan is a relatively quick and hassle-free way to get funds. The end use of personal loans is not specified (unlike for example a home or auto loan) and you can utilise the funds to whatever end you like, barring speculating on the stock market or gambling, for example.
There is no doubt that these loans are popular, but they can be a tad expensive in comparison to other loan types, as without collateral security, lenders tend to offer a personal loan at a higher rate of interest. Typically, interest rates range from between 13-19%, with processing fees charged additionally.
Typically, personal loans are available to salaried professionals across the top cities in India, subject to a minimum age and income eligibility criteria. It is also possible to apply jointly for a personal loan with a parent. Check with the lender of your choice for the basic eligibility criteria and documentation requirements.
The first thing to do is plan your wedding well in advance, and estimate the costs you know you’ll incur. Factor in everything from clothes, jewellery, gifts and other arrangements including the venue of your choice, the ceremonies, food, music and travel costs. This will help you budget accordingly, and know how much you will need by way of a wedding loan.
Once you have identified the amount you require, shop around. Check the websites of banks and financial institutions and compare personal loan offers available. Essentially, look for the best deal online and only then make your loan application. Most lenders today offer loan disbursements in a short time frame (as little as 72 hours), with minimal documentation and low to zero foreclosure charges. Additionally, there may be pre-approved offers on your personal loan that you can avail of. Of course, the terms and conditions differ from one lender to another, so make sure you know what you are signing up for. Read the fine print carefully before you go ahead with the application.
While it may be your dream to have an extravagant wedding, remember that ultimately you will be responsible for loan repayment. Hence avail of only what you can comfortably repay, as marriage brings with it additional financial responsibility. Do not over extend yourself with unreasonable wedding expenses and start off your new life with a debt burden you are unable to repay.
As with all loans, a CIBIL check is important. It is in fact the first thing a lender will do once you submit your loan application. Hence, make sure your CIBIL score is good, for your loan to get approved. A Low score will invariably mean a loan approved at a higher rate of interest or in the worst case, even declined. It is in fact a good idea to call for your CIBIL report from any credit bureau in the country to see where you stand. This will help you to understand whether you need to work on improving your score prior to applying for the loan. Hence, requesting for a copy of your report well in advance is a prudent move.
The importance of your CIBIL score cannot be stressed enough. It is virtually the key to your financial fitness, and is required at times such as these, when getting your loan approved is critical. Hence, make sure you stay credit healthy and can avail of a personal loan when you really need the funds to have the wedding of your dreams!
While marriages are made in heaven, they are financed on earth! Go ahead; enjoy your big day just the way you envisaged it. Create the memories of a lifetime, but remember that all is this possible only if you stay credit healthy!