Moneycontrol
Nov 24, 2017 11:04 AM IST | Source: Moneycontrol.com

Should you take a loan to fund your dream wedding?

There are multiple ways to raise money for funding your wedding.

Adhil Shetty

Adhil Shetty

Planning a wedding is an immensely exciting but expensive affair. Family gathering, never-ending parties and wedding rituals also have a financial cost attached along with. Therefore, it is all the more important to make a solid plan for your dream wedding and be financially prepared for the expenses. In case you haven't begun yet, there is still time to manage a 'perfect one' by opting for other ways to fund it. One such way is a loan, which comes handy for short-term needs.

Let’s take a look at few options that you can consider while planning for your Big Day.

Apply for a personal loan: A personal loan is an unsecured loan that is provided by a lender based on the credit history, available assets and the borrower’s ability to repay the loan. You can easily apply for a personal loan at any bank of your choice or you can compare the quotes by applying online. Banks and financial institutions typically charge anywhere from 11%-33% interest on personal loans, depending upon the risk profile of the borrower. Traditionally, a good credit score, income tax return and last six month’s salary slip are enough to secure a personal loan.

Avail a marriage loan: This type of loan comes to your rescue when for some reason your personal loan gets rejected. A marriage loan is a type of personal loan but is offered by non-banking financial institutions as well. The interest rates are however higher for such loans and typically vary from 11%-31%. You can opt for pre-payment for such loans, which allows you to pay off your loans before the due date.

Opt for a secured loan: In case you do not have a good credit score, you can try to avail loans by putting up fixed deposits, post office savings certificate or life insurance policies as security. Since secured loans offer lenders an alternative method to recoup their investment, interest rates are comparatively lower than personal loans. Interest rates for secured loans range between 12%-15%.

In case you’re unable to repay the loan, the lender will look to recover the borrowed amount by cashing in on your savings, investment or insurance. Also, contrary to unsecured loans this doesn’t require much paperwork.

Start a crowd-funding page: If nothing else works, you can try creating your very own crowd funding page and ask for help from your relatives, friends or community. Crowd-funding sites help people in need accumulate funds for a particular cause. All you have to do is fill up the form on their site and set your target amount.

Remember to put up a well-written story about why this wedding is so important for you and how they can help you. The more personal your page is, the more likely it will be to raise the target amount.

(The writer is CEO, BankBazaar.com)

tags #loans

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