Is it a good idea to get a loan for your wedding?

Getting married is one of the biggest and most exciting decisions many people make in their lifetime. And while your special day is bound to be wonderfully romantic, chances are, it will also be costly.

The average Aussie wedding comes with a price tag of $34,715, according to nearly 600 wedding businesses and more than 3,500 engaged and recently married couples surveyed for Easy Weddings’ Wedding Industry Report 2023.

“In 2023, overall wedding costs have increased 7.7% year-on-year, with the industry feeling the pinch of cost-of-living and supply chain pressures.” said Darcy Allen, Easy Weddings' senior wedding sales manager.

As everyone will tell you, mention wedding to a caterer and the price of the cake doubles. No wonder that the majority of couples in Australia choose to take out a loan to cover wedding expenses, according to ASIC’s MoneySmart.

If you’re thinking of taking out a loan, first stop to consider the benefits and drawbacks, and what type of loan you will need.

Personal loans

When it comes to financing a wedding, many Australian couples turn to personal loans. Personal loans allow people to borrow a certain amount of cash (often up to $100,000) for a set amount of time – generally between one and seven years.

But the amount and time frame in which you wish to borrow aren’t the only factors you might want to consider before taking out a wedding loan.

There are two big factors to consider with personal loans. Personal loans can offer fixed interest or variable interest rates. They can also be secured or unsecured.

A fixed-rate means interest rate certainty perhaps at the expense of flexibility, while variable-rate loans can fluctuate but might offer more flexibility such as extra repayments.

A secured loan sees another asset used as security against a loan. Thus, secured loans are typically less risky for lenders and can offer lower interest rates than their unsecured counterparts.

Not everyone can take out a personal loan, however. Aussie lenders will generally require a borrower to be:

• 18 years or older
• An Australian citizen, permanent resident, or have a valid visa
• Employed and/or receiving regular income
• In possession of a good credit rating

If you don’t entirely fit that brief, it could be worth chatting to a broker or lender to assess your options.

Joint personal loans

While personal loans are traditionally taken out by one person, couples might wish to apply for a joint personal loan.

That means both parties are responsible for the repayments and the debt.

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Credit cards

Credit cards have been in Australia for nearly 50 years and have helped many couples finance their wedding days in that time.

A credit card allows you to access debt as you need it, with your lender sending a periodic bill. Often, if you pay back all you’ve spent in a period before that bill is due, you won’t face any interest on your purchases.

Some credit card products also offer rewards, allowing a person to rack up points they can spend elsewhere (honeymoon, anyone?).

However, there’s typically a limit to how much you can put on a credit card in a given period. The interest fees that credit card debt attracts are also generally higher than those offered by a personal loan.

You will also have fewer days to pay off the loan without accruing interest. Credit card interest can be significantly higher than personal loan interest.

Line of credit

If neither of those sound appealing to you and your sweetheart, you might be more enticed by a line of credit, especially if you’re using your home loan to access it.

A line of credit gives you access to a predetermined amount of money. Under this type of loan, you’re only charged interest on the money you’ve used to, say, pay the deposit on your wedding caterer.

The remaining balance remains at your disposal, free of interest charges until you need it.

Line of credit loans are often accessed through your home loan lender. As such, while the interest rate might be lower, it is stretched out over your loan term, which could mean thousands of extra dollars in interest paid.

Pros and cons of taking out a wedding loan

As with any financial decision, there are benefits and downsides to taking out a wedding loan. Here are five that might be worth considering.

Pros

More to spend

Of course, the major benefit to taking out a wedding loan is to have more cash to spend. In fact, it's probably the only reason most couples consider doing so.

Most people expect their wedding day to be one of the most romantic of their lives and are willing to fork out cash to make it extra special.

Whether it's fireworks at midnight or designer attire, there might be expenses on which a couple isn’t willing to compromise and, thus, could turn to a loan to afford.

Longer repayment time frame

Couples who take out loans for their wedding days might find it helpful to pay back the cost of the event over a longer time. On the other hand, those who pay for their big days with cash might find their finances squeezed harder in the short term.

Cons

Interest fees

Couples who take out a loan for their wedding will probably end up paying interest and other fees while repaying their lender.

Debt

A couple taking out a personal loan to pay for their big day will likely start out married life with debt left over from their wedding. That might be something to consider when contemplating a wedding loan.

Potential to overspend

Planning a wedding is an exciting time and one in which it's easy to overspend. As mentioned above, nearly a quarter of couples spend more on their wedding day than they planned to. That could be particularly problematic for those funding their big days with debt.

How much does a wedding cost?

The amount your wedding day costs will depend on hundreds of factors.

A courthouse elopement could see you and your boo just a few hundred dollars out of pocket. On the other hand, a full-service, luxury event with hundreds of guests could easily run into the six-figures.

How much your wedding could cost will also depend on where you get married, with couples in Victoria spending the most on average. 

Source: Easy Weddings, Wedding Industry Report 2023

As the above chart shows, only Tasmanian weddings, on average, come in cheaper than the nation’s average wedding budget of $27,550.

Meanwhile, couples are straying from the traditional way to pay for a wedding: The bank of Mum and Dad.

“We’re finding that fewer couples are relying on families to contribute to their wedding expenses than in recent years,” Ms Allen said.

“Modern couples are paying for a lot of the weddings themselves. Less than a third are combining funds from their families while 52% are paying for their wedding on their own.”

Items for a wedding and their cost

So, what expenses might betrothed couples expect to face?

Source: Easy Weddings, Wedding Industry Report 2023

The expected cost of your dream wedding might come as a shock once all the numbers are crunched.

It’s probably no surprise then, that over a quarter of Australian couples spend more than what they originally budgeted for and 23% find sticking to their budget the most stressful part of wedding planning.

Fortunately, when it comes to financing your wedding, there are plenty of loans that might be worth considering.

How to save money when planning a wedding

There are plenty of ways betrothed couples can stretch their wedding budget.

Limit the guest list

One of the simplest is limiting their guest list.

“Couples are generally surprised about venue costs, particularly food and beverage costs per head,” Ms Allen said.

“Prices will vary depending on many factors including the region, menu and number of guests, however, couples should expect to spend around $180 per guest for a food & beverage package, on top of the venue hire fees.”

Host mid-week or in low-season
Hosting a mid-week or low-season wedding might also save hundreds, or even thousands.

Since venue costs are, on average, the largest expense facing couples on their wedding days, tying the knot mid-week or in the off-peak season could be worthwhile.

Consider substitutes or DIY options

“We’re also seeing cost-effective substitutes like a champagne tower in place of the traditional wedding cake,” Ms Allen said.

“Another emerging wedding trend we’re also seeing is upcycling and crafty DIY elements, which are not only more sustainable options, but also more cost-effective.”

Make a budget/plan and stick to it

But perhaps the most effective way to ensure you’re financial comfort during wedding planning is to be prepared: Make a plan and stick to it.

“The key is to set a budget and compromise on your have-to’s well before the wedding day,” Ms Allen said.

“Make sure you're both on the same page to save disagreements during an already stressful planning experience.

“Agree on a budget upfront, but also allow some creep-in wiggle room on a few ‘hot button’ items, if necessary.”

Read more: Personal Loan Basics

Brooke Cooper

Finance Journalist

Brooke Cooper joined the InfoChoice Group in 2023. She previously wrote for the Motley Fool, covering topics such as share prices, companies, and IPOs. With interests in everyday finance and wealth, Brooke is passionate about educating Aussies - especially young adults - on all things money.

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