Wedding Personal loan Advantages & Disadvantages - Personal Loan Blog - Tata Capital

Advantages and Disadvantages of Applying for a Personal Loan for Wedding

Feb 28, 2017

Your wedding is probably the most important day in your life. Couples try their best to make their wedding a perfect occasion. However, a lavish wedding may be an expensive affair and even after considering all the savings many couples face financial crunches while planning for their dream wedding.

Several financial institutions offer loans to help you fulfill your dream of a perfect wedding. However, before you decide to avail of a loan for your wedding, it is important to understand personal loan advantages & disadvantages.

Advantages of choosing a personal loan for wedding

  • When you opt for personal finance to fund your wedding, you are aware of the Equated Monthly Installments (EMIs) you need to pay. This helps you plan your financial budget without facing any difficulties.
  • To ensure you do not find it difficult to repay the borrowed amount, you may opt for a tenure that suits your financial situation.
  • The interest rate on the personal loan is affordable. Moreover, you may further reduce the total cost of borrowing by opting for shorter repayment duration.
  • Unlike other secured loans, you do not have to offer any collateral or security when you apply for a personal loan since such loans are unsecured. This ensures your assets are not at a risk in case you find it difficult to service the loan.
  • If you have a good credit score and an excellent repayment history, you may be able to procure the loan at a lower rate of interest. This is beneficial to reduce the cost of your borrowings.

Disadvantages of choosing a personal loan for wedding

  • Since these types of loans are unsecured, you will have to pay a higher rate of interest. The lenders do not require collateral, which is why these are riskier than other types of secured funding options thereby resulting in higher interest rates.
  • You may not be able to avail of a higher amount of loan according to your eligibility. This means that you may still not get the entire amount needed to host your perfect dream wedding.
  • As the rate of interest on personal loans is higher than that of secured loans like home loans or loan against property (LAP), you will have to pay significantly more than what you borrowed.
  • The EMI comprises principal and interest. Therefore, if you opt for longer repayment tenure, the payout increases as you pay more interest on the borrowed amount.

Having a dream wedding may be something you have thought about your entire life. However, before you decide to apply for a loan to host the perfect wedding, you need to understand all the pros and cons of such an option. You must also not make a hasty decision and conduct extensive research on the various loan options before signing on the dotted line.