 "Indian Wedding, wedding,marriage")
Indian Wedding, wedding,marriage
In the wedding season, many couples and their families are faced with the task of financing ceremonies and celebrations. With rising costs and societal pressures, an increasing number of Indians are turning to marriage loans to fund their big day.
Financial institutions offer attractive terms for marriage loans, including competitive interest rates, quick approvals, and minimal documentation. Some even provide additional benefits such as pre-approved limits and customised repayment schedules. Let’s find out if taking a loan for marriage is smart.
What is a marriage loan?
It is a personal loan offered by banks and financial institutions specifically for financing wedding expenses. Loan amounts typically range between Rs 40 lakh and Rs 50 lakh and interest rates start around 10.5 per cent per annum. Loan tenures are flexible, generally ranging from one to six years. No collateral or security is required – the loan is approved based on the applicant’s income and creditworthiness.
When should one take a marriage loan?
If you’ve exhausted other options like personal savings, family contributions, and credit card rewards, a wedding loan may be considered. However, it’s crucial to carefully evaluate your financial situation and ensure you can comfortably afford the monthly loan payments.
Pros of wedding loans
Flexible financing: Wedding loans allow you to borrow the exact amount you need to cover your wedding costs, rather than relying solely on your own savings. This can give you more flexibility in planning your dream wedding.
Fixed repayment terms: Personal loans used for weddings typically have fixed interest rates and repayment schedules, making it easier to budget and plan your finances.
Potential credit boost: Making on-time payments on a wedding loan can help build your credit history and improve your credit score over time.
Cons of wedding loans
Increased debt: Taking on additional debt to pay for a one-time event like a wedding can put a strain on your finances when you and your spouse are starting a new life together. The debt could affect your ability to save for other goals like buying a home or starting a family.
Higher interest rates: Depending on your credit profile, you may end up paying a higher interest rate on a wedding loan compared to other financing options like credit cards or personal savings. This can significantly increase the overall cost of your wedding.
Long repayment periods: Wedding loans typically have repayment terms of one to seven years. This means you could be paying off your wedding for years after the big day has passed.
“Whether it is wise to borrow money for marriage is a complex subject. Many families borrow as they must live up to an image or are forced to borrow as minimum level of wedding is expected according to tradition and customs, or there is a mismatch in liquidity (assets are not encashable or is illiquid). They borrow money in the hope that in a short time they will be able to liquidate their assets and pay off the loan,” said Sandeep Shah, partner at CIGNAS.
“Others borrow because they feel their existing stock investments will outperform the cost of finance and hence borrow or they are expecting a huge bonus and would like to spend before it is credited to their bank account. As financial markets are volatile, a considered view must be taken before venturing into borrowing money at interest and spending on marriage,” he said.
First Published: Jul 09 2024 | 11:04 AM IST
