Getting married in 2021: what are my options to fund a wedding?

Spring wedding season is around the corner, and despite tying the knot in 2021 may look a little different than before.  

Many Aussies have been forced to change their wedding plans throughout 2020 and this year, with multiple lockdowns and different levels of restrictions.

However, for many couples the expense of a wedding was and is still a tricky cost to cover. Whether mum and dad are pitching in, you take out a personal loan or reach into your wallet for your credit card, the truth is that your savings may not be enough.  

In fact, according to moneysmart the average cost of a wedding in Australia currently sits at $36,000. Their stats found that while 82% of couples relied on their savings to cover wedding costs, another 60% took out a loan and 18% used their plastic. 

So, should I take out a wedding loan or use my credit card?

The choice of taking out a wedding loan or using a credit card to fund your big day all comes down to how much you need to borrow and how you’ll pay it back.

If you have a big expense to pay, like the venue, a personal loan may be a more worthwhile option … and here’s why: 

Currently on the Mozo database the average unsecured personal loan rate sits at 9.72%. That’s compared to the average credit card rate of 16.93%. 

Take this scenario for example. 

Let’s say you needed to borrow $10,000 to put towards your dream wedding. 

You opt for a three-year personal loan at the average rate of 9.72% p.a. By making only your required repayments of $321 per month, you’d end up paying $1,569 in interest over the life of the loan. 

On the other hand, if you chose to use a credit card with a rate of 16.93% p.a. with no annual fee and kept the same monthly repayment of $321, it would take three and a half years to pay off your debt. Plus, you’d end up forking out $3,266 in interest that’s $1,697 more than the personal loan option.  

What about for small costs? 

If you only need to cover smaller costs, say something that is under $2,000, a credit card may be a better option. In the case that you need to pay off your debt over a period of time, and can’t pay the balance in full before the month is up, you may want to consider a low rate credit card. 

It’s important to remember that you do need to apply for both a personal loan or credit card. Providers will require you to include information about your earnings, savings, credit health and more. So make sure you give yourself time to be approved as well as know how your credit rating is looking - it may influence the rate you are offered or your ability to take out a loan or credit card at all. 

Also, avoid payday or instant personal loans. These loans might seem attractive with their fast approval times and lower borrowing amounts, but they can come with extremely high interest rates or require you to make balloon repayments once the loan term is up. 

Thinking of a personal loan to fund your wedding? Check out these top options below!