The cost of living continues to rise and with that so does many other facets of life. Automobiles, home buying and something simple as a loaf of bread can begin costing you more. One of the more noticeable items is the cost of a wedding. Easily, weddings can run into the five figures and as such, can force couples to take out loans to finance the wedding.
Lenders will be more than happen to give couples money, but in turn many will charge a higher interest rates, leaving couple with high loan payments to start out their married lives. Published by MoneyUnder30.com, the average wedding currently costs $30,000.
That’s right, a whopping $30,000.
For many, this is a down payment on a home, an emergency fund or a small nest egg should times get tough. With a price tag in the mid five figures, it’s no wonder couples are turning to financing as an option. Certainly there are couples who have the luxury of tapping into mom and dad to pay for their wedding, but for the majority this isn’t an option.
Just to put this into perspective, let’s breakdown the cost allocations of a wedding so you can visualize where the money is going.
- Reception Venue
- Open Bar
- Goodie Bags
And the list goes on. With this list, you can begin associating costs and quickly see how a wedding can surpass the five figure mark. If you take food a $50/plate, a venue at $5,000 with 150 guests, that alone will bring you to $12,500. That takes nothing else into consideration. Finance companies haven taken note and are making their move.
Why You Should Always Perform Due Diligence
Financial technology companies are on the move as there continues to be a rise in wedding loans. Upstart and Earnest are among the many offering wedding loans in an attempt to gain market share. The issue with these lending companies is they are charging interest rates north of 20%, which is comparable to a credit card. David Green, the Chief Product Officer of Earnest was quoted as saying, “people are carrying more debt, they want to get married but don’t have the funds to do so. These loans are a way to thread the needle”.
One could argue this is unethical lending, but it’s also up to the borrower to do their own due diligence before accepting proceeds from a loan.
According to the Washington Post, the average couple will borrow $16,000 for a wedding and have it paid off within three years. Interest rates on these loans will tend to be between 7 percent and 18 percent. However, many of these financial technology companies are marketing these loans as ways to make your wedding better. It includes using phrases such as Instagram worthy, or make it happen with low interest loans.
Another trend many are seeing is couples are getting married later in life so they can simply afford the costs. Also, this can mean parents are in retirement, thus putting constraints on their income and making them less likely to have a large financial contribution to the overall costs. Either way, the current market is forcing many couples to take on large sums of debt in order to finance the costs of marriage.
How to Cut Wedding Costs Without Sacrificing Quality
To avoid these high costs, look at cost saving features such as making your own decorations. Buying the items and putting them together will take more time, but it can save you hundreds or thousands of dollars in the long run. Another is look for a venue that can handle both the ceremony and reception. Bundling items together can help lower the overall costs. Lastly, limit your guest list to close friends and family. At $50/plate or more, it can quickly become costly to have people attend your most important day.
When planning a wedding, be mindful of the costs and attempt to keep them under control. If you have to borrow, look for interest rates that are competitive, and avoid the “wedding loans”, as these can carry rates north of 20%. If anything, take a few years to save and then have a wedding. The last thing you want is financial stress after arguably one of the best days of your life.
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