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Destination weddings can be expensive—from a tropical beach wedding in the Caribbean to a special destination wedding like Mexico, and from having a private wedding only with immediate family to having to fly over friends and family to your dream destination (that is if your guests don’t pay for themselves to visit – which is common).
Whatever your wedding plans, this special event can hurt your pocket without proper planning and budgeting. However, when you dream about a destination wedding and your savings are far from your goal, your next best choice could be to take out a personal loan for your upcoming wedding.
This article will discuss its pros and cons and what you should consider before taking out a loan for your destination wedding.
Taking out a loan for your destination wedding: a yay or nay?
There is no hard and fast rule or answer regarding whether you should take out a loan for your destination wedding, and the answer usually depends on different factors you and your partner have decided on.
A typical financial perspective would tell you that taking out a loan for an activity that can be postponed or budgeted down is not the smartest financial move.
According to Gary Hemming, Owner & Finance Director at ABC Finance, “Consider the interest, the application fees, your repayment capacity, or any collateral your loan might require.” He adds, “While most financial advisers would discourage you from taking out a personal loan for a destination wedding, taking out a loan isn’t always a bad idea as long as you can take advantage of the benefits of the cash proceeds of a personal loan.”
Pros and cons of taking out a loan for your destination wedding
Before you choose, here are some pros and cons for the yay or nay of the dream destination wedding:
Pros
- Convenience: Several channels, such as online lenders or traditional bank loans, allow you to qualify for a personal loan subject to their terms and requirements. Some lenders can even provide you with funds as quickly as 24 hours.
- Ample preparation time: Planning a destination wedding with available funds can help you prepare for the wedding long before your target date so you can avail yourself of discounted rates from your suppliers, which will help you get rid of your wedding stress.
- Buy wedding needs for less: You can buy wedding needs yourself from suppliers at lower prices, but these suppliers often only require straight cash payments.
Matt Wouldes, Founder at Land & Sea NZ, suggests, “If you’re on a budget but still want that vintage and fun wedding celebration, try exploring some social media wedding trends, like getting food trucks for a laid-back feast-on-wheels camping vibe rather than a rigid formal reception setting.”
- Longer repayment terms: Suppose you’re in a tight cash flow. In that case, personal loans allow you to repay destination wedding expenses for an extended period at an affordable monthly amortization compared to using your credit card, which you may often need to pay by your next billing period.
Cons
- High-interest rates: Several online lenders or even traditional banks give high interest rates for personal loans.
According to Kathryn MacDonell, CEO at Trilby Misso Lawyers, “Interest rates from personal loans are frequently based on a person’s credit score. When a lender finds out you have a low credit score, you are a credit risk, which means you can still qualify for a personal loan but with higher interest rates to offset this risk to the lender.”
- Collateral: Personal loans are typically considered unsecured loans, which means a person can usually obtain them without any security in the form of assets like a house title, car registration, or savings account. However, some lenders may require collateral for personal loans, especially those with significant amounts.
- Starting the marriage with a debt: No one wants to be in debt, especially when starting a new phase of your life with marriage. If this is a deal breaker for you, reconsider taking out a personal loan, as most personal loans would require repayment terms of several months or years.
What to consider when taking out a loan for your destination wedding
Fees and charges
Aside from interest rates, most personal loans have additional charges, almost always overlooked by borrowers excited about getting quick funds for their destination wedding. Some of them are as follows:
- Origination fee: The fee for the processes and documentation required to avail of the loan can be paid upfront or deducted from the loaned amount.
- Application fee: This is the standard fee for taking out the loan and is usually non-refundable regardless of whether the loan is approved.
- Late and prepayment fees: These are fees paid when the loan payments are made late or when total loan payments are made before the end of the term.
The idea behind prepayment fees, or prepays, is to dissuade the lender from refinancing a loan at a lower interest rate, causing the lender to lose out on potential interest income. While most home and student loans are legally not allowed to charge for prepays, personal loans can still enforce these fees as long as they are written in the contract.
Credit score
Before taking out a personal loan, ensure a good credit score to get the best advantages, deals, and rates. Credit bureaus like Experian and TransUnion allow you to check your credit score for free once a year, and a ‘good’ credit score typically ranges from 670 to 739 in the FICO range.
According to Jeffrey Zhou, CEO and Founder of Fig Loans, “Being within the good credit score range is a green flag to the lenders that you are a good payer who pays your debt on time and in full. With these records, lenders would give you better (or lower) interest rates, a higher credit limit, and faster loan approval because you don’t pose a risk to their business.”
Fine print and disclosures
This applies to any contract-related agreements you need to enter before and after your destination wedding. It is crucial to read the fine print or disclosures before signing off on any financial document, like taking out a personal loan, for your destination wedding.
Jonathan Feniak, General Counsel at LLC Attorney, says, “Scrutinizing your loan contract allows you to compare the final details of your contract with your loan estimates and information to ensure that both parties are clear with the terms and repayment amount.”
Prioritizing your expenses
If you are set on taking out a loan, your next step should be prioritizing where to spend your available funds to maximize your personal loan for your destination wedding.
The average wedding cost in the U.S. is $33,000 in 2024. However, a destination wedding would incur additional costs for travel and accommodation of friends and families. All these costs broken down include, but are not limited to:
- Travel expenses and accommodation
- Bridesmaid dresses and hairstylists
- Wedding and reception venue
- Live band and entertainment
- Photographer and videographers
- Wedding planners
- Food and drinks
- Flowers and decorations
- Catering
- Destination wedding officiant
Toni Farrell, Marketing Manager at Coastal Motorhomes & Caravans, says, “If you want to go the non-traditional route, camping destination weddings can be a great way to celebrate your special day uniquely and in style—allowing for a more relaxed or laid-back celebration in the woods or the beach for a lesser cost.”
Wrapping up: Taking out A Loan for Your Destination Wedding
For couples, it is crucial to consider the pros and cons of holding a destination wedding at the expense of a personal loan, all its fees, interests, and charges, and the fine print and disclosures of a personal loan agreement before saying your yes to a personal loan to hold your destination wedding.
Let Destify help if you’re ready to take the next big step towards your destination wedding. Connect with us today, and let’s turn those destination wedding investments a reality!
(800) 792-6898
